Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan” will be posted around 9:00am EDT, every trading day.
For the Outlook, Forecast, and Trading Plans published this morning, please click here.
For the Results of the morning’s Trading Plans, please click here.
THE GIST (“THE WHAT”)
Hopes that the U.S. and China will be moving closer towards making a trade deal, coupled with the euphoria over a dovish Fed on Wednesday sparked a relief rally that lifted the S&P 500 index to close just 1% shy of hitting its all-time closing highs of April 30, 2019.
Dovish signals from the ECB lifted the index sharply higher at the open. Maintaining early gains throughout the session, the index closed at 2917.75, up 28.08 points and gaining 0.97% over previous session’s close. Trade-sensitive Technology and Industrials led the index higher and Energy stocks fueled the gains alongside a jump in oil prices. Eight out of the eleven primary sectors closed modestly higher, with defensive sectors capping gains in today’s rising risk-appetite.
THE DETAILS (The “How & Why”):
Stocks vulnerable to U.S. –China trade tensions posted strong gains after President Trump tweeted that he had a good telephone conversation with Chinese President Xi Jinping and is looking forward to meeting him at the upcoming G20 Summit meeting scheduled later this month.
Industrials and Technology sectors led the day’s gains, closing higher by 1.89% and 1.72%, respectively. Boeing Co. led the gains within the Industrials space, soaring 5.37% on reports that it has received commitments from several airline carriers to purchase its troubled 737 Max jets, lifting the aerospace giant’s stock to regains its 50 DMA for the first time since the deadly Ethiopian Air crash that led to the grounding of its 737 Max fleet.
Semiconductor stocks were among the top gainers of the session, bouncing back from their recent plunge. Xilinx Inc. was the best performer of the session, soaring 6.94%. Micron Technology Inc., Qorvo Inc. and NVIDIA Corp. all jumped more than 5% apiece. Analog Devices Inc., Applied Materials Inc., Broadcom Inc. and Microchip Technology fueled the day’s gains, all closing more than 4% higher each.
Hopes that the trade tensions will be eased helped boost oil prices. Energy sector rallied broadly to close 1.36% higher for the day. Meanwhile, the 10-year Treasury yield fell to its September 2017 lows, settling at 2.067% after the European Central Bank (ECB) President Mario Draghi signaled at further easing of monetary policy in an effort to stimulate the weakening Eurozone. Investors will be closely watching for signs of any rate cuts later this year by the Fed after its 2-day monetary policy meeting wraps up tomorrow.
A rise in risk-appetite dragged the defensive sectors lower in today’s session despite falling Treasury yields. Consumer Staples, Real Estate and Utilities closed lower by 0.57%, 0.34% and 0.31%, respectively.