Note: Our nightly “S&P 500 Outlook,Forecast, and Trading plan for Wed, 07/18” will be posted Tue, 07/17 night – please check back around 10:30pm/11pm EDT.
THE GIST (“THE WHAT”)
The S&P 500 index opened significantly lower weighed down by disappointing subscriber growth reported by Netflix Inc. post Monday’s session close. The index rebounded as investors digested the latest round of strong earnings results with Materials stocks in the lead.
Optimism was further boosted after Federal Reserve Chairman Jerome Powell down played the trade policy risks and reiterated the need for a gradual interest rate hike. The index broke through the key technical resistance at 2800 level. With 7 out of the 11 primary sectors ending the day higher, the index closed with a modest 0.40% gain and up 11.12 points at 2809.55.
The index registered the day’s high at 2814.19 – just less than a point below the upper bound for a choppy trading range mentioned in our outlook published Sunday, 07/15 afternoon, which said: “Between this broader 2775-2815 band, it would be a choppy, whipsaw range-trading.” (Click here to read/double check for the full report).
THE DETAILS (The “How & Why”):
Materials and Technology sectors erased previous session losses to be the best performers in today’s session, gaining 1.32% and 0.81% respectively. PPG Industrials, Ball Corp and DowDuPont Inc. were the top gainers within the Materials sector, rising 2.97%, 2.25% and 2.04% respectively. Technology sector was led higher by a 3.17% and 2.95% rise in stocks of Lam Research Corp. and Alliance Data Systems Corp.
Financials stocks extended Monday’s optimism, gaining 0.15% led by a 3.56% rise in stocks of Charles Schwab Corp. In his first testimony before Congress, Federal Reserve Chairman Jerome Powell reiterated the need for a gradual rate hike in the wake of improving economic conditions. While the 10-year Treasury yields rose alongside his comments, they settled at 2.864 inching a slight 0.7 basis point relatively unchanged for the day.
Consumer Staples sector was one of the top gainers in today’s broad-based optimistic mood, up 0.78%. Perrigo Co. and Johnson & Johnson were the top gainers of the day following better-than-expected results, up a solid 3.98% and 3.54%, lifting the broader Health Care sector by 0.54%. On the other hand, UnitedHealth Group was the biggest drag in the sector, down 2.60%.
Industrials and Consumer Discretionary sectors also ended the day higher by 0.38% and 0.10% respectively amid a lull in trade war news headlines. Netflix Inc. was the biggest drag within the FAANG stocks, down sharply by 10+%, albeit erasing some losses during the late session to close down just 5.24%.
Real Estate sector was the worst performer in the index, losing 0.63%. Energy, Telecommunication and Utilities sectors also shed 0.38%, 0.36% and 0.06% respectively.
