Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Wednesday, 11/07” will be posted around 8:30am EDT, Wednesday.
THE GIST (“THE WHAT”)
Trade-sensitive sectors led today’s relief rally, further supported by a tech rebound amid the long-awaited U.S. congressional mid-term elections. Gains, however, remained capped as investors keenly awaited the results of the closely watched mid-term elections, closing a volatile and choppy session near session highs at 2755.45, up 17.14 points and gaining a modest 0.63% over the previous session’s close.
Technically speaking, while the index retook the short-term technical indicator of 20 DMA (now at 2734.84), it now faces strong resistance at 200 DMA (now at 2763.77). All eleven primary sectors closed the session higher with Materials and Industrials in the lead.
THE DETAILS (The “How & Why”):
Materials sector was the best performer in today’s rally, up 1.51%, receiving a major boost from some of the strong quarterly performances. Mosaic Company and Martin Marietta Materials Inc. surged 10.61% and 8.42% respectively on beating revenue and earnings estimates.
Jacobs Engineering Group was the top gainer within the Industrials sector, rising 3.54% after Citigroup upgraded its stock to ‘buy’ rating, citing a 23.68% potential of upside from the stock’s previous close. Further boosting the sector were transportations stocks, getting a lift from 3.67% rise in Expeditors International of Washington Inc. after the freight company beat revenue expectations.
Technology stocks staged a rebound from recent sharp losses after Apple Inc. disappointed investors with a tepid outlook and later cancelling production boost of its lower-priced iPhone XR line. The tech giant bounced back 1.08% from its recent steep losses that dragged it into a correction territory, lifting its suppliers alongside. Symantec Corp. was the strongest performer within the sector, soaring 12.59% following reports that a private equity firm Thoma Bravo plans to acquire the cybersecurity specialist.
Advanced Micro Devices Inc. rose 3.92% after the chip maker announced that Amazon.com Inc. will use its chips for its cloud business to provide services to its customers. Broadridge Financial Solutions Inc. capped sector gains, tumbling 9.70% on missing revenue estimates.
Utilities, Real Estate and Consumer Staples extended their gains, up 0.76%, 0.52% and 0.55% respectively. Retail stocks also rose broadly to lift the Consumer Discretionary sector modestly higher by 0.54%. Generic drugmaker Mylan N.V. was the top gainer of the session, soaring 16.13% and lifting the broader Health Care sector up by 0.52% on reporting better-than-expected third quarter earnings.
Treasury yields rose ahead of the Federal Reserve’s policy statement release on Thursday and as investors keenly await the results of mid-term elections. The broader Financials sector rose modestly by 0.50% with the 10-year Treasury yield rising to its highest level since October 10, 2018.
The energy sector was weakest performer in today’s rally, up 0.34%, paring early session declines as oil prices fell for the seventh day in a row after the Trump administration formally imposed sanctions on Iranian oil but granted temporary waivers to eight importing countries.