Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan” will be posted around 9:00am EDT, every trading day.

For the Outlook, Forecast, and Trading Plans published this morning, please click here

For the Results of the morning’s Trading Plans, please click here.

THE GIST (“THE WHAT”)

The S&P 500 index extended gains for the fifth straight session in today’s shortened trading session ahead of the July 4th holiday. Weaker-than-expected economic data revived expectations of a Fed rate cut, sending Treasury yields to their near 2-year lows. High-dividend paying stocks extended their previous session’s solid gains to lead the index higher to hit a yet another record daily close for the third straight session at 2995.82, up 22.81 points and gaining 0.77% over previous session’s close.

THE DETAILS (The “How & Why”):

Falling further below the closely watched 2% level, the 10-year Treasury yield hit its lowest level since November 2016 to settle at 1.951%. In a sign of slowing momentum of economic growth, weaker-than-expected private payrolls reading released by the ADP for the month of June revived expectation of a Fed rate cut later this month, sending yields lower. Meanwhile, trade deficits for the month of May widened by 8.4% to a five-month high as businesses continue to pile-up on inventories in the wake of rising tariffs on Chinese imports.

Reports that the Federal Reserve and the ECB (European Central Bank) could appoint new members with a dovish mindset further strengthened the expectations of a rate cut. Investors will be looking forward and closely reading into the Friday’s employment report for further insights into the state of economic health, especially after disappointing reading last month.

High-dividend paying defensive stocks across Real Estate and Consumer Staples sectors outperformed to lead the broader index towards another record daily close. Except Coty Inc. that struggled amid concerns of a costly turnaround plan, all the other components within these two sectors participated in gains. Kellogg Co. was the strongest performer in Consumer Staples space, surging 6.30% following bullish comments by an analyst around its plant-based meat offerings.

Health Care and Utilities were the other notable gainers, up 0.91% and 0.84%, respectively. Netflix Inc. led all the FAANG components higher with a 1.68% gain. Semiconductor stocks, however, extended their weakness for the second straight session. Broadcom Inc. fell 3.54% on reports that the global supplier of semiconductors could acquire security software maker Symantec Corp. for $15 billion. Symantec Corp., on the other hand, soared 13.57% to be the top gainer of the session.