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For the Results of the morning’s Trading Plans, please click here.
THE GIST (“THE WHAT”)
Mixed earnings and disappointing economic data dragged the S&P 500 index lower for the second session in a row. Renewed trade concerns further dampened sentiment.
Opening mostly flat, the index pulled back sharply after CSX Corp. sparked a sell-off among transportation stocks on posting a weaker-than-expected guidance. Energy stocks fueled the day’s declines as oil prices fell to their two-week low. Chopping within a narrow range for most part of the afternoon session, the index took a sharp leg lower during the last few minutes of trading to close near session lows at 2984.42, down 19.62 points and losing 0.65% over previous day’s close.
THE DETAILS (The “How & Why”):
CSX Corp. sparked an intense selling among transportation stocks after the railroad giant plunged 10.27% on missing second quarterly earnings expectations and issuing a disappointing guidance for the full year, citing deteriorating global economic outlook and falling shipping volume in the wake of international trade tensions. Norfolk Southern Corp., Union Pacific Corp. and Kansas City Southern all fell sharply by 7.48%, 6.05% and 4.91%, respectively.
Industrials were the biggest drag on the index, down sharply by 2.17% weighed down by falling transportation and airline stocks. American Airline Group Inc., Alaska Air Group Inc. and Southwest Airlines Co. all traded lower by more than 1.5% each.
Oil prices continued their descend into the second straight session, falling to their 2-week low after the EIA data indicated a larger-than-expected build up in refined product inventories. Energy was another major decliner of the session, down broadly by 1.17% led by a 4.81% drop in Halliburton Co. Cabot Oil & Gas Corp, Baker Hughes, Devon Energy Corp, Hess Corp and Cimarex Energy Co. were all lower by more than 3% each.
Ralph Lauren Corp led the retail and departmental chain stocks lower. The apparel brand fell 3.82% after Goldman Sachs downgraded it from ‘neutral’ to ‘sell’ citing weakening North American clothing market. Meanwhile, bank earnings kept on rolling in with Comerica Inc. dropping 3.57% on missing net interest income and profit estimates.
On the other hand, Bank of America Corp posted modest gains of 0.69% after the banking giant posted record quarterly profits on the back of strong retail banking business. A decline in net interest income, however, kept its day’s gains capped. Falling yields further weighed down on the broader Financials sector.
The 10-year Treasury yield settled lower at 2.048% following a weaker-than-expected new homebuilding data that fell for the second consecutive month, despite lower mortgage rates. Utilities stocks received a slight boost from falling yields. It was the only sector to close higher with a decent 0.43% gain, limiting losses within the broader index.