Note: Our nightly “S&P 500 Outlook, Forecast, and Trading plan for Thursday, 08/30” will be posted around 8:30am EDT, Thursday.
THE GIST (“THE WHAT”)
Riding on trade optimism and strong economic data, the S&P 500 closed at record highs for the fourth day in a row. In an attempt to resolve the long ongoing trade issues, Canadian Foreign Minister Chrystia Freelend met with the Trump administration officials late Tuesday, setting Friday as a deadline to conclude a reasonable deal. Optimism over trade boosted sentiment at the session’s open.
Technology and Consumer Discretionary led the index to new all-time highs following Amazon Inc.’s bullish upgrade by Morgan Stanley. Maintaining the gains throughout the afternoon session and registering the day’s high at 2916.50, the index closed near session highs at 2914.04, up 16.52 points and with a modest 0.52% gain over previous day’s close. Eight out of the eleven primary sectors closed the session higher.
THE DETAILS (The “How & Why”):
Consumer Discretionary and Technology sectors outperformed, gaining 1.12% and 1.01% respectively, leading the index to register fresh highs. Amazon Inc. climbed to a record high, gaining 3.38% intraday after Morgan Stanley upgraded the online retailer citing improving business mix that could potentially boost its market capitalization to reach $1.2 trillion.
Foot Locker Inc. and Royal Caribbean Cruises Inc. were the other notable gainers within the sector, up 3.28% and 3.16% respectively on stock upgrades. Several retailers, however, were weighed down by bullish upgrades of their online counterpart. Tiffany & Co. was the worst performer of the session, losing 4.26% on reporting disappointing quarterly results.
Red Hat Inc. and PayPal Holdings Inc. were the top gainers within the Technology sector, up 2.59% and 2.22% respectively. Google-parent Alphabet Inc. also rose 1.51% on stock upgrade by Morgan Stanley, erasing previous session losses after President Trump accused the company of rigging its search results.
A weakening dollar and easing trade tensions boosted commodities and metal prices to lift the broader Materials sector modestly higher by 0.73%. With a 2.43% gain, Mosaic Company led the sector higher. Regeneron Pharmaceuticals Inc. and Abiomed Inc. were the top gainers of the session, up 4.25% and 4.16%, lifting the Health Care sector up by 0.66%. Energy stocks also extended their gains by 0.63% alongside a rise in oil prices on reports of a decline in domestic crude supplies.
Treasury yields were relatively unchanged following an auction of $31 billion in 7-year notes. Telecommunications, Real Estate and Financials were the only sectors offsetting the day’s gains, shedding 0.76%, 0.11% and 0.02% respectively.
On the economic data front, in its best performance in four years, the GDP for the second quarter was revised to an annualized rate of 4.2%, slightly higher compared to the earlier estimated 4.1% growth rate. On the other hand, Pending-home sales fell 0.7% for the month of July.