Note: Our nightly “S&P 500 Outlook, Forecast, and Trading plan for Thursday, 07/26” will be posted Wed, 07/25 night – please check back around 10:30pm/11pm EDT.
THE GIST (“THE WHAT”)
Gaining solidly for the third straight day and driven primarily by strong quarterly earnings, the index closed near January 25 highs at 2846.07, up 25.67 points and gaining 0.91% over the previous session’s close. Led by Technology stocks ahead of the keenly awaited Facebook earnings report, ten out of the eleven primary sectors closed the session with gains.
Struggling in the early session and weighed down by disappointing results by industry leaders like Boeing Co., General Motors Co. and AT&T Inc., the index was helped by Technology stocks leading the index higher, as FANG stocks extended their recent rally. Holding on to the gains while trading in a tight range for most part of the afternoon session, the index rose sharply in the last half hour of the session as trade tensions eased following the keenly watched meeting between President Trump and the European Commission President Jean-Claude Juncker.
THE DETAILS (The “How & Why”):
While corporate performances dominated the price action in today’s session, optimism was capped ahead of the meeting between President Trump and European Commission President Jean-Claude Juncker to discuss key trade related issues. The index rose sharply alongside the meeting as investors cheered on news of European Union agreeing to ease tariffs and import more soybeans from the U.S.
Extending previous session’s optimism following Alphabet Inc.’s strong earnings, Technology sector led the day’s gains as FANG stocks reached fresh highs in anticipation of strong quarterly earnings release by Facebook Inc. after the close. Flir Systems Inc. and Corning Inc. were top gainers for the day, up 11.79% and 11.33% respectively on beating estimates.
Several Industrial stocks including Robert Half International Inc., Waste Management Inc. and Rockwell Automation Corp. rose on solid earnings by 8.03%, 7.79% and 7.62% respectively to be amongst the best performers of the day and boosting the broader Industrial sector by 1.33%. HCA healthcare Inc. soared 9.22% on beating revenue and profit earnings, lifting the broader Health Care sector by 1.15%. Oil prices rose on reports of a large decline in U.S. crude oil inventories helping the Energy sector to gain 0.90%.
While Treasury yields inched lower for most part of the day as investors kept an eye on the meeting between President Trump and the European Commission President, yields spiked on easing trade tensions after the European Union agreed to cut industrial tariffs and increase soybean imports. Financials sector closed the session higher by 0.26%.
Other notable gainers in today’s broad-based rally were Real Estate, Materials and Consumer Staples, up 0.96%, 0.78% and 0.66% respectively. On the other hand, Consumer Discretionary sector traded lower for most part of the day, weighed down by weaker outlook reported by several automakers and transportation companies. Stocks of General Motors Co. fell 4.64% after the company slashed its future guidance on rising cost concerns due to the recently imposed tariffs. The sector however ended the session with a modest 0.69% gain on easing trade tensions.
Telecommunications was the only sector to end the session lower, down 2.88%. The sector was dragged lower by a sharp 4.51% drop in stocks of AT&T Inc. The company reported disappointing second quarter revenues following its merger with Time Warner Inc.