Note: Our nightly “S&P 500 Outlook, Forecast, and Trading plan for Wednesday, 08/15” will be posted around 8:30am EDT, Wednesday.

THE GIST (“THE WHAT”)

Strong earnings came to the rescue once again, boosting optimism at the open and lifting the index higher as the Turkish crisis eased and the Lira gained some of its lost ground. The S&P 500 index ended its 4-day losing streak with all the eleven primary sectors supporting the day’s gains in today’s relief rally. Gains, however, remained capped on a lower volume as investors remain cautious on how the Turkish saga unfolds.
The index opened the session on a positive note following solid earnings by Tapestry Inc. and Advanced Auto Parts Inc. Staying steady but holding on to the gains after registering the day’s high of 2843.11 (once again, just about one point above the upper bound of a choppy trading range indicated by our models! Click here to read the full report), the index closed near session highs at 2839.96, up 18.03 points and gaining 0.64% over previous session’s close.


THE DETAILS (The “How & Why”):

The plunging Turkish Lira took a breather, recovering slightly after an intense sell-off over the last 2 days. In an attempt to stabilize its currency that has lost more than 40% of its value this year, Turkey’s central bank assured the country’s financial institutions of all the liquidity measures required to help stabilize the currency.  In retaliation against the U.S. sanctions, President Erdogan also urged his countrymen to boycott Apple and other U.S. electronic items.
Consumer Discretionary led the index higher, rising 0.95% led by Tapestry Inc. and Advanced Auto Parts Inc. that gained 12.01% and 7.79% to be the top gainers in the index on the back of strong second quarter performance. Several retail stocks gained on optimism ahead of earnings release this week.
Yields inched up slightly on easing of Turkey’s economic crisis, lifting the broader Financials sector higher by 0.86%. Materials stocks gained 0.76%, erasing some of the previous session losses as commodities prices stabilized after tumbling in the last session on the back of a strengthening dollar. 
Telecommunications, Industrials and Technology sectors were the other notable gainers, up 0.72%, 0.65% and 0.62% respectively. Nielsen Holdings PLC extended its rally, up 5.81% on news of a potential sell-off. Other defensive sectors including Consumer Staples, Health Care and Real Estate also closed the session higher by 0.64%, 0.45% and 0.36% respecti
vely in today’s broad-based relief rally.
Energy stocks edged up 0.26% despite a fall in oil prices following an API (American Petroleum Institute) report that indicated a surprise increase in the U.S. crude oil inventory.