Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Wednesday, 11/28” will be posted around 8:30am EDT, Wednesday.
THE GIST (“THE WHAT”)
Building on previous session’s rebound, the S&P 500 index closed the choppy session with decent gains on prospects of a mutually agreeable trade deal between the U.S. and China. Strengthening dollar, however, weighed down on the Materials stocks, keeping the day’s gains capped.
Opening significantly lower after President Trump ignited trade jitters by hinting at his willingness to extend the trade tensions with China and charging a 10% tariff on all iPhones and laptops made in China. Trading remained directionless for most part of the session, swinging between small gains and losses as Technology stocks extended their rebound while falling metal and commodity prices dragged the Materials sector lower.
The index, however, gained a solid upward momentum in the afternoon session after National Economic Council Director Larry Kudlow indicated that the continuing dialogue with China could result into a mutually agreeable trade deal. With eight out of the eleven primary sectors ending the session higher, the index closed near session highs at 2682.17, up 8.97 points and gaining 0.33% over previous session’s close.
THE DETAILS (The “How & Why”):
Defensive stocks outperformed the broader index, building on previous session’s gain. Health Care was the best performing sector, up 0.99%, followed by Consumer Staples, Utilities and Real Estate, all higher by 0.91%, 0.87% and 0.56% respectively. PG&E Corp. was the top gainer of the session, soaring 7.36% on hopes of some relief for the utility company from significant liabilities that are expected out of California’s deadliest wildfires.
Technology and Communication Services sectors extended their previous session’s rebound, up 0.24% and 0.57% despite weakness within the FAANG stocks. Except Netflix Inc., other FAANG stocks traded lower for the day. While Facebook Inc. gave up 1.38% amid ongoing data privacy issues, Apple Inc. shed 0.38% after President Trump threatened a 10% tariff on all Apple iPhones made in China. Advanced Micro Devices Inc. was the top gainers within the sector, up 4.83%.
While Macy’s Inc. and Kohl’s Corp led the retail stocks higher by 4.08% and 3.73% respectively on the back of solid holiday season sales, General Motors Co extended losses, shedding another 2.55% after President Trump threatened to slash subsidies for the automaker’s electric vehicles. The broader Consumer Discretionary sector closed the session slightly higher by 0.24%.
On the downside, trade tensions came back to the fore during the early session following President Trump’s comments late Monday that hinted at his willingness to extend trade tensions with China. Trade sensitive Materials sector was the biggest drag on the index, down 1.25%. A strengthening dollar further weighed down on the sector.
Energy sector gave up some of their previous session’s gains, falling 0.33% alongside a decline in oil prices ahead of the highly awaited meeting between the OPEC and its trading partners to discuss future production levels. Also adding to the day’s losses were Industrials sector, down 0.25%, led by a sharp 4.14% decline in United Technologies Corp. on announcing its plan to spin-off its Otis elevator division and Carrier building systems business.