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 last published Results of the Morning Trading Plans, please click here.
THE GIST (“THE WHAT”)
Lacking headlines around trade disputes or economic data, the S&P 500 index rallied alongside surging Energy stocks. Oil prices extended its climb following reports of a sharp drop in U.S. crude stockpiles, easing fears of a global supply glut. Except Utilities, all the other primary sectors participated in gains, lifting the index to close near session highs at 2887.94, up 18.78 points and gaining a decent 0.65% over previous session’s close.
The index opened lower as bond markets continued flashing recessionary warning signs. Paring losses, the index gained a strong upward momentum alongside surging Energy stocks and with beaten-down sectors gaining lost ground. Gains, however, remained capped as investors closely monitor developments around U.S. – China trade tensions. Trading volume also remained subdued ahead of the U.S. Labor Day weekend.
THE DETAILS (The “How & Why”):
Geopolitical jitters and uncertainty around U.S. – China trade policy keep investors on the edge and drive them towards safe-haven bond assets, pushing the yields closer to their multi-year lows. Treasury yields extended their slide across the board, with the 30-year yield slipping to a record low at 1.949%. The 2-year and 10-year yield spread inverted the most since 2007, strengthening the recessionary signs.
Oil prices received a solid boost from an EIA report indicating an unexpected decline in crude oil inventories by 10 million barrels last week. Energy was the best performing sector, up 1.40%, led by a 10.55% surge in Cimarex Energy Co. Diamondback Energy Inc., Halliburton Co. and National Oilwell Varco Inc. were the other strong gainers, climbing more than 3% apiece.
Sectors that were beaten-down in last week’s rout also gained some of their lost ground to support the day’s gains. Consumer Discretionary and Industrials closed more than 1% higher each. Better-than-feared earnings posted by Tiffany & Co. lifted the specialty retailer by 3.16%. Kohl’s Corp and L Brands Inc. also posted gains of more than 3% apiece.
Rebounding from previous session’s slump, Financials gained 0.91%. Goldman Sachs Group, JP Morgan Chase & Co, Citigroup Inc. and Bank of America Corp, all closed higher by more than 1% each.
Gains within the Technology space remained capped with Autodesk Inc. dampening sentiment despite beating earnings estimates. The software company tumbled 6.74% on issuing a dismal outlook for the fiscal year. Defense-play sectors lagged the broader index in gains. Utilities was the only sector to buck the trend an close the session 0.26% lower.