Note: Our nightly “S&P 500 Outlook, Forecast, and Trading plan for Thursday, 08/09” will be posted by 7:30am/8:00am EDT, Thursday.

THE GIST (“THE WHAT”)

The S&P 500 index took a pause after reaching a striking distance from its all-time highs, pulling back at the open as China retaliated with threats of new round of tariffs on U.S. goods worth $16 billion. Oil prices also took a breather, falling sharply on the back of escalating trade tensions, dragging the Energy sector lower. A Mixed round of earnings across the sectors further weighed down on the broader index.  
The index rebounded after registering the day’s low at 2853.09 within the first hour, and then moving into positive territory as gains in Technology and Financials stocks offset weakness due to trade war concerns. Struggling to hold on to gains, the index fluctuated between small gains and small losses within a very tight range. Ending a four session winning streak, the index closed the session relatively unchanged, down only 0.75 points at 2857.70. Six out of the eleven primary sectors ended the session lower.

THE DETAILS (The “How & Why”):

Consumer Staples and Energy were the biggest drag – sector-wise – on the index, down 0.77% and 0.76% respectively. Oil prices fell sharply by more than 3% following reports that China plans to impose 25% tariff on $16 billion worth of U.S. imports including crude oil, cars, coal and steel products. Molson Coors Brewing Company was the worst performer within the Consumer Staples sector, down 3.23%, whereas CVS Health Corp was among the day’s top gainers, rising 4.16% on topping estimates.
In the current rising yield environment, Utilities and Real Estate were the other notable decliners of the session, losing 0.54% and 53%. Trade-sensitive Industrials and Materials also shed 0.41% and 0.31% respectively on intensifying trade spat between the U.S. and China.
Offsetting the day’s losses were 0.28% and 0.26% gains in Technology and Financials stocks. Yields settled slightly lower following a record $26 billion auction of 10-year Treasury bonds. Health Care, Telecommunication and Consumer Discretionary sector were also among the day’s gainers, rising 0.16%, 0.13% and 0.12% respectively.  Michael Kors Holdings Ltd and Albemarle Corp. were the top gainers of the day, soaring 6.72% and 6.42% on beating estimates.