Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan” will be posted around 9:00am EDT, every trading day.
For the Outlook, Forecast, and Trading Plans published this morning, please click here
For the last published Results of the Morning Trading Plans, please click here.
THE GIST (“THE WHAT”)
Lacking headlines around trade and Brexit, the S&P500 index flipped between gains and losses as investors digested a mixed batch of key earnings. Disappointing results by Caterpillar, Boeing and Texas Instruments dampened sentiment and capped gains.
Struggling for direction for most part of the session, a strong rally going into the close nudged the index to close near session highs and at a striking distance away from record close ahead of the biggest day of third quarter earnings season. Regaining the 3000 level once again, the index closed the choppy session at 3004.52, up 8.53 points and gaining0.28% over previous session’s close.
THE DETAILS (The “How & Why”):
Earnings rolled out in full swing, driving today’s choppy price action. The world’s largest construction equipment maker Caterpillar Inc. disappointed investors on missing earnings and revenue estimates by a steep margin.
The industrial bellwether also slashed its full-year guidance, citing fading end-user demand and inventory reductions by its dealers in the wake of trade policy uncertainties. Rebounding from early session’s steep declines, the stock closed 1.20% higher as investors cheered the management’s move to make production cuts in an effort to navigate the slowdown.
The keenly-awaited earnings by Boeing Inc. further dampened sentiment. The troubled aerospace giant missed earnings estimates but logged a 1.04% gain amid reports that the airplane maker will stick to its timeline for returning its now grounded 737 Max fleet back into service in the fourth quarter.
Meanwhile, Chipotle Mexican Grill weighed down heavily on Consumer Discretionary sector, falling sharply by 5.16% despite beating estimates after several analysts underscored the restaurant giant’s high valuations.
Texas Instruments Inc. was another major drag on the index, tanking 7.48% and weighing down heavily on other semiconductor stocks after the chipmaker giant fell short of earnings expectations and issued a dismal outlook while warning of further slowdown amid ongoing trade issues.
Microchip Technology, Broadcom Inc. and Analog Devices Inc. were the other major decliners within this space, all falling more than 2% apiece. Apple Inc., however, offset some of these sharp losses within the Technology space, registering a yet another record close, jumping 1.34% following bullish comments by Morgan Stanley.
On the bright side, Energy stocks outperformed the broader index with oil prices climbing for second straight session and hitting one-month high following a surprise drop in weekly domestic crude supplies. Devon Energy Corp. and EOG Resources Inc. rose more than 3% each.
A 2.09% jump in Facebook Inc. lifted the Communication Services space as investors closely monitored its CEO Mark Zuckerberg’s testimony in Capitol Hill on the social-media giant’s controversial cryptocurrency project. Except Amazon.com Inc. that slipped 0.20%, all the other FAANG components traded higher for the day.