Note: Our nightly “S&P 500 Outlook, Forecast, and Trading plan for Wednesday, 09/12” will be posted around 8:30am EDT, Wednesday.
THE GIST (“THE WHAT”)
Surging oil prices ahead of a major hurricane that is expected to hit the Eastern coast led the S&P 500 index higher as investors brush aside trade related concerns for now. Finding strong support at January highs, the index remains range bound as investors maintain a cautious stand amid all the trade related tensions. While the U.S. – Canada talks continue with no resolution to their NAFTA disputes, the U.S. and China drag on their trade rhetoric.
Opening lower, the index erased early session losses on the back of Energy stocks that got a major lift from surging oil prices. The Labor Department released the number of job openings in July that reached record levels, further boosting optimism. Registering the day’s high at 2892.52, the index maintained the gains thereafter, trading in a very tight range.
A mixed sector-wise performance led the index higher to close near session highs at 2887.89 (closing just about one tenth of a point away from the upper bound of the pivot levels our models have been monitoring! Click here to read the full report), up 10.76 points and gaining 0.37% over previous day’s close.
THE DETAILS (The “How & Why”):
Telecommunications sector outperformed the broader index, gaining 1.08%, led by a 3.21% gain in CenturyLink Inc. A category 4 Hurricane expected to make landfall on the Eastern coast added to the concerns of a tightening global crude oil supply, sending the oil prices soaring in today’s session. Energy stocks gained 0.98% on strong oil prices.
Technology stocks were broadly higher, extending their rebound from last week’s major sell-off. Activision Blizzard Inc. soared 7.06% after an analyst at Benchmark reaffirmed his ‘buy’ rating on the video game giant, citing the potential of its new ‘Call of Duty’ game to generate strong annual sales. Apple Inc. also gained 2.53% ahead of its new iPhone launch, erasing some of the recent losses. However, several chip stocks were amongst the weakest performers in the index. Western Digital Corp., Broadcom Inc. and Micron Technology Inc. fell 3.63%, 3.35% and 2.90% respectively on stock downgrade by an RBC analyst.
Amazon Inc. and Netflix Inc. rose 2.48% and 2.16% to lift the broader Consumer Discretionary sector higher by 0.82%. Homebuilders and home improvement retailers’ stocks extended their gains as investors continue to pile on their stock ahead of a major hurricane. Materials and Financials sectors were the other gainers in today’s session, up 0.19% and 0.12% respectively.
Offsetting some of these gains were defensive stocks that gave up some of their recent strong gains on the back of profit taking. Consumer Staples, Utilities and Real Estate sectors shed 0.39%, 0.35% and 0.07% respectively.
On the economic data front, new job openings in the month of July rose to a record 6.94 million and the Small-Business Sentiment also climbed to a record high in the month of August. However, budget deficit widened further to $211 billion, doubling compared to the year-on-year period.