Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan” will be posted around 9:00am EDT, every trading day.
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For the last published Results of the Morning Trading Plans, please click here.
THE GIST (“THE WHAT”)
The S&P 500 index closed the wild session mostly unchanged following the largely expected 25 basis point rate cut announcement by the Fed. Holding on to steady losses ahead of the FOMC decision announcement, the index took a sharp leg lower as markets digested the monetary policy decision as more hawkish than anticipated. Erasing losses during the last hour of the session alongside reassuring comments by Jerome Powell, the index closed flat at 3006.73, up only 1.03 points over previous session’s close.
THE DETAILS (The “How & Why”):
Stocks fell to their session lows after the Fed reduced its benchmark interest rate, as largely expected, by 25 basis points amid muted inflationary pressures and trade policy uncertainty, while not committing to any further stimulus citing a robust economy. A more hawkish than expected Fed disappointed investors that were broadly expecting one more rate cut this year.
Reiterating the strength in the economy, Fed Chair Jerome Powell, however, calmed the nervous investors by reassuring that the central bank will be open to further easing its monetary policy, if warranted by the data. The 10-year Treasury yield pared its day’s slide to settle slightly lower at 1.777%. Banks and Financial stocks jumped during the late-afternoon session amid signs of no further rate cuts.
Utilities also closed with modest gains, albeit giving back some of their early session gains after the central bank failed to commit to further rate cuts. Energy stocks posted the worst declines of the session as oil prices further retreated from their Monday’s spike, falling 2% following reports that President Trump has ordered a substantial increase of Iranian sanctions. Real Estate stocks also erased some of their recent strong gains.
Meanwhile, FedEx Corp. weighed down heavily on the Industrials space. The logistics giant tanked 12.92% on missing quarterly earnings estimates and slashing its guidance for the year, citing global economic weakness in the wake of intensifying trade tensions. All the other sectors closed relatively unchanged for the day.