Note: Our nightly “S&P 500 Outlook, Forecast, and Trading plan for Wed, 07/25” will be posted Tue, 07/24 night – please check back around 10:30pm/11pm EDT.
THE GIST (“THE WHAT”)
The S&P 500 index opened the session with significant gains as Technology and Financial stocks rallied at the open on the back of upbeat quarterly results by Alphabet Inc. and rising yields. The index however pulled back on registering the day’s high of 2829.99, as Technology stocks retreated and yields softened in the afternoon session.
Trading in a wide range and finding support at our now several times reiterated level of 2810 (day’s low registered at 2811.12), the index closed the session near January 31st high with a modest 0.48% gain, up 13.42 points at 2820.40. While all the eleven primary sectors opened higher, only nine closed the session with gains led by Telecommunication and Energy stocks. The index closed higher for the second day in a row as strong earnings continue to dominate market action during the busiest week of earnings season.
THE DETAILS (The “How & Why”):
Google parent Alphabet Inc. gapped up at the open reaching record highs after several analysts upgraded the tech giant on reporting solid top line growth despite booking for a $5.1 billion fine levied by the European regulators. The broader Technology sector got a major boost at the open as FANG stocks also gained momentum alongside a rise in stocks of Alphabet Inc. in anticipation of higher earnings ahead of the much awaited results by the other tech giants. The sector closed higher by a 0.50% as gains faded during the latter session.
Extending Monday’s gains, Treasury yields spiked at the open lifting Financial stocks. In the largest one-day rise since June 1, U.S. Treasury yields rose in Monday’s session mirroring a spike in Japanese bond yields after the Bank of Japan (BoJ) hinted at scaling back its monetary stimulus program sooner than expected in an effort to combat low inflation. The sector however closed the session up by only 0.33% as yields pulled back in the afternoon session ahead of the release of GDP data due Friday.
Leading the day’s gains were Telecommunications and Energy sectors, up 1.76% and 1.32% respectively. Rising tensions between the U.S. and Iran amid an ongoing war of words between both the country’s leaderships helped lift oil prices higher. Health Care sector also rose on the back of strong performances by industry leaders like Biogen Inc. and Eli Lilly & Co.
Among the other notable gainers in today’s session were Materials and Industrials, up 1.30% and 0.50% respectively. Stocks of Avery Dennison soared 11.08% on beating estimates to be the top gainer in the index, supporting gains in the broader Materials sector. Both sectors also got a lift in the afternoon session as several agricultural and farming equipment manufactures edged higher after President Trump announced his plan to offer a $12 billion emergency aid to the farmers hurt by tariffs.
The only sectors to end the session lower were Real Estate and Consumer Discretionary, down 0.34% and 0.28% respectively. Whirlpool Corp. was the worst performer within the index, plummeting 14.52% after reporting a weaker guidance for the fiscal year on concerns of rising costs of steel and aluminum inputs due to the recently imposed tariffs.