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THE GIST (“THE WHAT”)
China waived tariffs on several U.S. goods ahead of the next round of trade talks, lifting the S&P 500 index to break above the 3000 mark for the first time since July 30. Apple Inc. powered the gains further after the iPhone maker surprised markets by slashing prices for its new iPhones and streaming service.
Treasury yields jumped higher for the third straight session in a row, boosting risk-appetite. Rotation out of growth stocks and into value stocks eased in today’s broad-based rally. Trading higher throughout the session, the index gained a solid momentum during the last few minutes of the session to close at 3000.93, up 21.54 points and gaining 0.72% over previous session’s close.
THE DETAILS (The “How & Why”):
Indicating its willingness to compromise, China announced a waiver of tariffs on several U.S. goods ahead of the scheduled trade talks next month. Trade-sensitive Industrials, Materials and Communication Services posted modest gains amid trade optimism. Boeing Co and Caterpillar Inc. extended their recent strong gains by 3.64% and 2.15%, respectively.
Technology and Health Care led the broader gains, both closing higher by 1.01% each. Apple Inc., a major component within the index soared 3.18%, regaining $1 trillion market valuation after the iPhone maker released new iPhones, iPads and Apple TV+ a day earlier at a surprisingly low price. Microchip Technology, Skyworks Solutions Inc. and Western Digital Corp jumped 3.08%, 4% and 3.26%, respectively.
Treasury yields continued surging amid positive economic data and easing trade tensions. The 10-year Treasury yield bounced back from its multi-year lows to settle at 1.73%. Regional and global banks were strong performers of today’s session. Despite surging yields, defensive stocks clawed back some of their recent losses. Real Estate was the only sector to buck the trend and close lower for the day as yields rebounded from multi-year lows across maturities.
Energy stocks also underperformed the broader index as oil prices fell following reports that President Trump might consider easing Iranian sanctions that could increase the global crude supply. Baker Hughes was the worst decliner of the session, tumbling 7.55% after its parent General Electric Co. announced its plan to sell majority of its stake in this oil and gas company for close to $3 billion.