Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Wednesday, 09/19” will be posted around 8:30am EDT, Wednesday.
THE GIST (“THE WHAT”)
Shrugging off the escalating trade rhetoric, the S&P 500 index rebounded from yesterday’s pull back. Technology stocks bounced back to lead the index higher. However, lacking any major catalyst, the all-time highs prove to be a strong resistance for the index to break through. It continues to be range bound as investors maintain a cautious stand amid the growing geopolitical and trade headline risks.
President Trump announced that a 10% tariff on $200 billion worth of Chinese goods will go into effect next week, increasing to a 25% by the end of the year. China retaliated with a 10% tariff on $60 billion worth of American goods. Investors’ reaction remained muted to the intensifying spat – finding relief, instead, in the reduced rate of tariffs from the earlier announced 25% to 10%.
Opening on a positive note, the index maintained steady gains throughout the session and closed at 2904.31, off session highs (closing only 1.31 point above the level indicated by our intraday models to go long. Click here to read the full report.), up 15.51 and gaining a decent 0.54% gain over the previous session’s close. Seven out of the eleven primary sectors closed the session higher, with Consumer Discretionary and Technology stocks leading the gains.
THE DETAILS (The “How & Why”):
Technology stocks bounced back from previous session’s sell-off, with FANG stocks regaining the lost ground as investors put trade war concerns on the back-burner for now. Consumer Discretionary sector was the strongest performer in the index, closing 1.27% higher, led by a 4.94% rise in Netflix Inc. and a 3.97% gain in L Brands Inc.
Technology sector was the next best performer, up 0.62%, led higher by 4.29% and 4.02% gains in Symantec Corp and Micron Technology Inc. Industrial stocks were also among the strong performers on the back of easing trade-war concerns, closing the session modestly higher by 0.89%. Health Care, Energy and Financials were the other notable gainers in today’s session, up 0.53%, 0.70% and 0.41% respectively.
Remarks from Saudi Arabia that it is willing to let oil prices rise to $80/barrel lifted the oil prices at the open, benefiting the broader Energy sector. Oil prices further spiked on geopolitical risks after Russia blamed Israel for shooting down one of its reconnaissance planes. Separately, 10-year treasury yields bumped up to cross the 3% mark once again to settle at 3.056%.
On the other hand, defensive sectors were the laggards in today’s session, giving up some of the previous session’s gains. Real Estate, Consumer Staples and Utilities were the notable decliners, down 0.59%, 0.44% and 0.21% respectively. General Mills was the worst performer in the session, falling sharply by 7.62% on missing sales estimates.