Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Thursday, 04/11” will be posted around 8:30am EDT, Thursday.
THE GIST (“THE WHAT”)
Resuming its rally after a brief pause in the previous session, the S&P 500 index closed higher, moving 1.82% closer to September’s record all-time highs. Trading on a muted volume ahead of the release of minutes of Federal Reserve’s latest policy meeting, the index received a modest lift after the central bank reiterated its decision to pause its interest rate hike cycle.
Led by Real Estate and Technology sectors, the index closed near session highs at 2888.21, up 10.01 points and gaining 0.35% over previous session’s close. Sector-wise performance was mixed with eight out of the eleven primary sectors participating in gains.
THE DETAILS (The “How & Why”):
On economic data front, the Consumer Price Index (CPI), the key metric of inflation rose by 0.4% in March at its fastest pace in 14 months. The Core CPI reading, however, came in lower-than-expected suggesting that the underlying inflation remains mostly tamed, validating the central bank’s decision to leave the benchmark interest rates unchanged for now.
Underwhelming CPI data, coupled with the ECB’s and Federal Reserve’s decision to hold benchmark interest rates steady send the Treasury yields slightly lower. While the Fed’s minutes reiterated the central bank’s decision to pause its interest rate hike cycle, it also revealed some members’ opinion of raising rates if the economy continues to grow at the current pace.
Real Estate was the best performing sector, benefiting from sliding yields and closing 0.73% higher. Technology sector was the next best performer, up 0.70% led by Take Two Interactive Software Inc., Advanced Micro Devices Inc. and Xilinx Inc., all rising by 2.20%, 2.17% and 2.06%, respectively.
Consumer Discretionary, Energy and Consumer Staples also sported modest gains of 0.49%, 0.42% and 0.32%. Conagra Brands Inc. was the top gainer of the session, jumping 6.72% on beating quarterly earnings estimates and issuing an upbeat outlook for the full- fiscal year. Delta Air Lines Inc. also rose 1.6% on reporting record first quarter revenues, lifting other airline stocks.
Broad-based weakness in Utilities capped gains within the broader index. The sector extended declines by 0.38%. Materials and Industrials were relatively unchanged for the day.
The struggling Boeing Inc. continued to weigh down on the Industrials space, falling another 1.11% following reports that the aircraft manufacturer has no new orders for 737 Max jet following a worldwide grounding of this model last month. Meanwhile, AmerisourceBergen Corp. was the worst decliner of the session, falling 4.43% after an analyst at Evercore ISI lowered the drug distributer’s rating.