Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Thursday, 09/20” will be posted around 8:30am EDT, Thursday.
THE GIST (“THE WHAT”)
The S&P 500 closed higher for the second straight day, albeit with a choppy price action as investors brushed aside the lingering trade tensions. Financials and Energy stocks outperformed, offsetting a major sell-off in defensive sectors. Technology stocks also gave up some of their previous session’s strong gains on the back of profit taking.
Opening higher, the index registered the day’s high at 2912.36, less than 2 points shy of record close of 29 August, 2018 and unable to break through the strong resistance in the face of unresolved trade disputes between the U.S. and its key trading partners. With only four sectors ending the session higher, the index closed off of session highs at 2907.95, up only 3.64 points and gaining 0.13% over previous session’s close. (Today’s price action tested both our medium-term and intraday models’ upper bound levels, closing under 2 points above the level indicated by our models to go long.Click here to read the full text. )
THE DETAILS (The “How & Why”):
Financial stocks outperformed, leading the index higher alongside a climb in yields. The 10-year Treasury yield settled at 3.069%, its highest level since May 2018 as investors brushed aside intensifying trade tensions. E* TRADE Financial Corp. was the best performer within the sector, gaining 3.76% following a stock upgrade by Jefferies, citing low valuations.
Praxair Inc. led the Materials sector higher, rising 3.92% on reports that Linde AG and Praxair Inc. are inching closer to a U.S. antitrust approval for their $45 billion merger. The sector closed the session higher for the second straight day, up 1.12% on the back of commodities and metal prices that were broadly higher for the session.
Energy was the only other notable gainer, up 0.38%. The EIA report indicated a fifth straight weekly decline in U.S. crude stockpiles by 2.1 million barrels last week, lifting oil prices and supporting gains in Energy sector.
Overshadowing some of these day’s gains were sharp decline in defensive sectors, falling on the back of rising yields. Utilities were the worst performing sector of the session, down 2.12%, with all of its components trading lower for the day.
Telecommunication, Real Estate, Consumer Staples and Health Care extended their previous session’s slide, losing 1.35%, 0.91%, 0.15% and 0.11% respectively.
Copart Inc. was the biggest decliner in today’s session, losing 13.39% on missing earnings estimates, and dragging the broader Industrials sector slightly lower by 0.04%. Technology stocks also pulled back after leading the index higher in previous session, down 0.10% with several chip stocks ending the session lower on the back of profit taking amid growing trade friction between the U.S. and China that could potentially hurt their profitability.