Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Thursday, 10/18” will be posted around 8:30am EDT, Thursday.
THE GIST (“THE WHAT”)
Lacking optimism at the open following weaker-than-expected Housing starts data, the index reversed early session losses on registering the day’s low at 2781.81 on the back of strong corporate results across sectors. Struggling to maintain gains, the index was however pulled back in the afternoon session after the Federal Reserve reiterated its commitment towards more rate hikes in the coming year.
Flipping between gains and losses, the index ended a choppy session flat at 2809.21, down fractionally by only 0.71 point with a mixed sectorial performance. Financials led the gains, while Materials and Energy sectors underperformed. Today’s price action tested both the upper and lower trading levels indicated by our models. The index registered the day’s low under 2 points away from medium-term model’s lower bound and the day’s high was registered under 1 point above the level indicated by our intra-day models. (Please click here to read the full report and/or to verify this claim)
THE DETAILS (The “How & Why”):
The worst performing sectors of the session were trade-sensitive Materials and Industrials, down 0.83% and 0.67% respectively. Freeport-McMoRan Inc., the world’s largest copper miner fell 2.21% ahead of its earnings release tomorrow. Vulcan Materials Company and Martin Marietta Materials Inc. led the sector losses, down 4.63% and 3.27% respectively.
Energy sector was broadly lower by 0.70%, led by Newfield Exploration Company and Devon Energy Corporation, down 3.16% and 2.91% respectively. Oil prices settled sharply lower following a surprise increase in the U.S. crude inventories by 6.5 million barrels.
Walmart Inc. and Advance Auto Parts Inc. announced that they are teaming up for a specialty online auto-parts store, sending the auto parts retailers’ stocks tumbling in today’s session. AutoZone Inc. and Advanced Auto Parts Inc. declined 7.60% and 5.22% to drag the Consumer Discretionary sector lower by 0.69%.
Home Depot Inc. was a sharp decliner within the sector, down 4.34% following stock downgrade by Credit Suisse, citing weakness in housing market and slowing earnings growth. Losses within the sector were, however, limited due to Netflix Inc.’s solid gain of 5.28%, fueled by stock upgrades by several analysts, citing strong subscriber growth in the third quarter.
The broader Technology sector also gave up some of its previous session’s strong gains, losing 0.47%. International Business Machines Corp. was the worst performer of the session, down 7.63% in its worst day in almost 4 years on missing revenue estimates. Chip stocks, however, extended their previous session’s gains after ASML Holding N.V. released better-than-expected quarterly results with a bullish outlook on demand from memory and logic computer chip makers.
Defensive sectors performances were mixed. While Consumer Staples and Health Care rose modestly by 0.48% each, Real Estate and Utilities shed 0.24% and 0.15% respectively. Financials sector also extended its previous sessions gains, up 0.91% backed by strong quarterly results by Goldman Sachs Group Inc. and Morgan Stanley.