Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Thursday, 05/09” will be posted around 8:30am EDT, Thursday.
THE GIST (“THE WHAT”)
The S&P 500 index attempted to stabilize after two days of intense selling after President Trump accused China of backtracking on its promises, threatening China with a fresh round of tariffs as early as Friday. The index whipsawed during the early session as investors remained cautious amid growing pessimism over the U.S. – China trade stand-off.
The index rebounded and held on to gains in the afternoon session on reports that Beijing’s top negotiator Liu He will be travelling to the U.S. to resume talks. Disappointing outlook by Intel Inc., however, weighed down on the index in the last 30 minutes of the session, dragging the index into the negative territory for the third straight session in a row to close at 2879.42, down 4.63 points and losing 0.16% over previous session’s close.
THE DETAILS (The “How & Why”):
The S&P 500 index extended declines for the third session in a row amid growing fears that a full-blown trade war with tit-for-tat tariffs could hurt corporate profitability and earnings growth. Investors will be closely monitoring the high-level trade talks that are expected to begin tomorrow.
The 10-year Treasury yield rose for the first time in three days, rebounding from its one-month low amid escalating trade tensions. Defensive stocks within the Utilities sector fell sharply alongside a rise in yields. The sector was broadly sold-off to close the session lower by 1.38%. NRG Energy Inc., AES Corp. and Entergy Corp were the worst performers within the Utility space, falling 4.37%, 3.33% and 2.36%, respectively.
Meanwhile, an 11.41% plunge in TripAdvisor Inc. weighed down heavily on Communication Services space. The online travel review website fell sharply on missing revenue estimates and posting a weaker non-hotel revenue growth outlook. Other stocks falling sharply on the back of disappointing earnings were DaVita Inc., Marathon Petroleum Corp. and Coty Inc., all lower by 8.55%, 7.07% and 5.47%, respectively.
Intel Inc. fell 2.46% following a disappointing three-year outlook by its management, citing stagnating PC chip sales. Microchip Technology Inc. also fell 2.77% on missing revenue expectations, further weighing down on semiconductor stocks. Analog Devices Inc. and Broadcom Inc. fell by 2.75% and 1.27%.
On the other hand, some of the gainers on the back of strong quarterly performance were Diamondback Energy Inc., FleetCor Technologies, Inc. and McKesson Corp., all solidly higher by 7.76%, 7.05% and 4.79% on beating first quarter earnings estimates.