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THE GIST (“THE WHAT”)
Hitting fresh intraday highs amid cautious optimism ahead of the keenly-awaited Trump’s economic speech, the S&P 500 index erased early session’s gains after President Trump failed to stoke up trade optimism.
Slight gains during the last trading hour nudged the index to close the choppy session at a new record close at 3091.84, up 4.83 points and gaining 0.16% over previous session’s close. Sector-wise performance was mixed with Real Estate and Energy leading the declines and modest gains in Health Care offsetting losses.
THE DETAILS (The “How & Why”):
The S&P 500 index rallied at the open ahead of the highly awaited speech by President Trump at the Economic Club of New York, hitting fresh new intraday highs as investors looked for some encouraging signs around the much touted trade deal. In his prepared speech, Trump credited himself for the strength of the U.S. economy and maintained his criticism on Fed’s monetary policies for capping the impact of last year’s tax cuts.
While reassuring investors that a significant phase one of the trade deal could happen soon, he failed to provide any further positive signs to investors looking for clarity around the recent reports of rollback of tariffs. Gains lost steam as investors digested his speech, briefly falling into negative territory. But a late session rally nudged the index higher to close off of session lows and logging a new record close.
Treasury yields settled slightly lower with the 10-year yield falling 2.1 basis points to close at 1.909%. All eyes will now be on Fed Chair Jerome Powell’s testimony in front of the Congress looking for clues about the central bank’s next monetary policy moves.
Underneath the choppy price action, Real Estate posted the worst declines of the session, down 0.79%, followed by a 0.59% decline in Energy stocks with oil prices paring gains following Trump’s speech. Modest gains in Health Care, Materials and Technology sectors offset some of these losses.
On the earnings front, DXC Technology Co. rocketed 20.2% despite missing revenue and earnings estimates. Investors shrugged off the dismal quarterly performance and focused on the management’s decision to pursue strategic alternatives for three business segments. Rockwell Automation Corp. was another sharp gainer of the session, soaring 10.50% in its best day in over a decade the industrial automation and information services company beat earnings estimates and issued a better-than-expected outlook.
On the other hand, Advance Auto Parts Inc. was the worst decliner of the session, falling 7.51% after the auto parts retailer missed same-store sales estimates. Viacom Inc. and CBS Corp were the other decliners, down more than 3% apiece on missing earnings and revenue expectations.