Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Wednesday, 05/15” will be posted around 8:30am EDT, Wednesday.
THE GIST (“THE WHAT”)
Optimism over a possible resolution of the long-drawn-out U.S. – China tariff spat following positive comments from both disputing side helped the S&P 500 index to partially erase Monday’s steep losses. Investors bought back the beaten down Technology and Industrial stocks that were brutally sold off in Monday’s session amid intensifying trade jitters. A rise in oil prices further fueled day’s gains.
The index maintained a steady climb higher for most part of the early session, but was pulled back during the last hour of the trading to close off session highs at 2834.41, up 22.54 points and gaining 0.80% over previous session’s close. Ten out of the eleven primary sectors traded higher in today’s relief rally, with Technology sector leading the advances.
THE DETAILS (The “How & Why”):
President Trump’s reassuring comments that he would talk to the Chinese President Xi Jinping at a G20 Summit later in June, coupled with positive comments from China’s foreign ministry that the two counterpart will continue their negotiations in the face of escalating tariff spat sparked a relief rally among the most beaten down stocks that are sensitive to U.S. – China trade war.
Technology and Industrials stocks were bought back after being brutally sold-off in Monday’s panic selling to close higher by 1.60% and 1.07%. Boeing Co, Caterpillar Inc. and Apple Inc. all rose more than 1% each. Semiconductor stocks were among the best performers in today’s relief rally. Advanced Micro Devices Inc., Western Digital Corp. and Take Two Interactive Software Inc. jumped 4.12%, 3.81% and 3.54%, respectively.
Oil and commodities prices also gained some of their lost ground, boosting Energy and Material sector by 1.09% and 0.82%. Rising risk-appetite helped Treasury yields to edge higher after hitting a six-week low in Monday’s panic selling across equities. The 10-year Treasury yield settled at 2.412%, providing a modest lift to banking stocks.
Utilities was the only sector to not participate in today’s broad based rally alongside yields edging higher. The sector gave up some of the previous session’s strong gains to close lower by 0.87%. Meanwhile, with first the quarter earnings season nearing its end, investors will be looking forward for several key earnings by retail and tech giants this week. Ralph Lauren Corp. was the worst decliner of the session, falling 3.66% after the luxury apparel maker posted weak sales numbers in North America, the largest market for its premium products.