Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Thursday, 06/13” will be posted around 8:30am EDT, Thursday.
THE GIST (“THE WHAT”)
The S&P 500 index closed lower for the second straight session, although holding on to its key support levels amid investor caution ahead of the keenly awaited G-20 summit wherein President Trump is expected to meet Chinese President Xi Jinping. Energy stocks dragged the index lower, tumbling broadly alongside plunging oil prices.
Defensive sectors were among the day’s gainers, suggesting a defensive character to today’s price action as investors favored safe-haven assets amid simmering trade tensions and concerns of slowing global economic growth. Trading mostly lower for most part of the session, the index whipsawed between a relatively thin range to close off of session lows at 2879.84, down 5.88 points and losing 0.20% over previous session’s close.
THE DETAILS (The “How & Why”):
The weekly Energy Information Administration (EIA) report indicated that crude oil inventories rose 2.2 million barrels last week, sending oil prices deeper into bear market territory and to their 5-month lows on concerns of rising supply glut. Energy was the worst performing sector with almost all of its components closing the session lower. EQT Corp, Halliburton Co and Noble Energy Inc. were the worst decliners within this space, tumbling 5.34%, 4.57% and 4.37%, respectively.
On the economic data front, the closely monitored Consumer Price Index (CPI) for the month of May rose by 0.1%, coming in-line with expectations and suggesting a lack of inflationary pressures within the economy while solidifying the expectations of a rate cut by the Federal Reserve. Treasury yields fell across the board with the 10-year Treasury yield settling lower at 2.106%, hurting banking and financial stocks. Goldman Sachs Group Inc., Morgan Stanley and Wells Fargo & Co fell more than 2% apiece, leading the Financials sector lower by 0.95%.
Semiconductor stocks remained under pressure for the second session in a row amid lingering U.S. – China trade tensions. Applied Materials Inc., Lam Research Corp, Western Digital Corp and Micron Technology Inc. all fell more than 5% each, dragging the Technology space down for the second straight session. Facebook Inc. weighed down heavily on Communication Services space, falling 1.72% following reports that the social media giant has uncovered several emails that link its CEO Mark Zuckerberg to its controversial privacy practices.
On the bright side, defensive stocks benefited from a cautious tone to today’s sentiment. Utilities sector outperformed the index with a sharp 1.33% gain. Health Care, Materials and Real Estate were the other modest gainers of the session, closing higher by 0.51%, 0.31% and 0.26%, respectively.