Note: Our nightly “S&P 500 Outlook, Forecast, and Trading plan for Wednesday, 08/22” will be posted around 8:30am EDT, Wednesday.
THE GIST (“THE WHAT”)
With no major news headlines to dampen investors’ optimism, the S&P 500 index moved solidly higher to register new all-time highs for the first time since January 26, 2018. Strong economic data supported by robust quarterly corporate performances has helped the index to recover from the February’s major correction, although investors remain cautiously bullish amid the ongoing U.S. – China trade spat, rising interest rates and economic crisis in the emerging markets.
Led by Consumer Discretionary and Industrial stocks, the index registered a new all-time high of 2873.23. The index however trimmed some of the gains as January 26, 2018 high of 2872.87 proves to be a strong resistance to breach with all the trade and geopolitical tensions looming in the background.
Extending gains for the fourth straight session, the index closed off session highs at 2862.96, (just about 3 points above the level indicated for a bullish bias by our medium-term models! Click here to read the full text) up 5.91 points and gaining 0.21% over previous day’s close. Seven out of the eleven primary sectors ended today’s session higher, with defensive sectors offsetting gains in Consumer Discretionary and Industrials sectors.
THE DETAILS (The “How & Why”):
Department stores and retail stocks continued their ascent, lifting the broader Consumer Discretionary sector higher to lead the index for the second day in a row. Discovery Inc. was the top gainer within the broader index, rising 5.84% on stock upgrade by brokerage firm Jefferies.
Homebuilder stocks, including PulteGroup Inc., Lennar Corp. and D.R. Horton Inc. were also among the top gainers in today’s session, up 5.47%, 4.17% and 3.75% respectively after the luxury home builder Toll Brothers reported a record revenue growth suggesting strength in new home market.
Industrials sector also outperformed the broader index, rising 0.75%. Oil prices rose for the fourth straight session, lifting the Energy sector modestly higher by 0.49%. Telecommunications, Materials and Financials sectors were the other notable gainers in today’s session, up 0.68%, 0.39% and 0.37% respectively. The broader Technology sector closed the session slightly higher by 0.07%, with several semiconductor companies reversing their recent losses.
On the other hand, defensive sectors limited the day’s gains as Treasury yields edged up ahead of the much awaited FOMC minutes release tomorrow. Real Estate, Consumer Staples and Utilities shed 0.91%, 0.77% and 0.72% respectively.
Multinational beauty company Coty Inc. was the worst performer in today’s session, losing 7.10% after reporting weaker-than-expected quarterly earnings and a weak full year guidance. J.M. Smucker Co. further dragged the Consumer Staples sector lower, losing 6.62% on reporting disappointing quarterly earnings.