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”)
Choppy directionless trading nudged the S&P500 index slightly higher to print another record close at 3094.04, up by only 2.20 points over previous session’s close.
Hovering around the flat line, the index initially received a slight lift after Powell signaled that the Fed’s monetary policy is likely to remain on hold. Gains faded following reports of a possible snag in U.S. – China trade negotiations over farm purchases. Oversold defensive stocks were bought back as yields fell amid fresh trade uncertainty, while cyclicals like Financials, Energy and Materials traded lower for the day.
THE DETAILS (The “How & Why”):
Investors closely watched the Fed Chair Jerome Powell’s testimony in Congress. Reiterating the strength in the current economic expansion that is expected to continue with the unemployment at 50-year lows and inflation hovering around the Fed’s 2% target, he signaled that the monetary policy is likely to remain on hold for now.
The index took a sharp leg lower amid fresh uncertainty following reports that the U.S. – China trade talks have hit a snag over farm purchases. While the Trump administration wants China to purchase up to $50 billion worth of agricultural products, China seems hesitant in committing to the figure ahead of the potential trade agreement.
Treasury yields fell across the curve with the 10-year Treasury yield falling back to 1.87%. Oversold defensive stocks were bought back and cyclical stocks were sold alongside falling yields. Utilities and Real Estate sectors closed the choppy session sharply higher by 1.47% and 1.07%, respectively. Consumer Staples were modestly higher by 0.86%.
Financials posted the worst declines of the session of 0.57%. Energy, Industrials and Materials also gave up some of their recent sharp gains. Among individual movers, Walt Disney Co. topped the day’s gains; surging 7.32% to its all-time highs after the entertainment conglomerate beat all expectations for subscription numbers for its newly launched Disney+, however, sending its rival Netflix Inc. down by 3.05%.