Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Thursday, 11/29” will be posted around 8:30am EDT, Thursday.

THE GIST (“THE WHAT”)

With easing of rate hike fears, the S&P 500 index registered a third straight day of gains, reclaiming the psychologically important 2700 level. Expectations of a possible breakthrough in the U.S. – China trade tensions further lifted sentiment in today’s risk-on session.
Opening higher following a mixed bag of economic data, the index spiked higher after Federal Reserve Chairman Jerome Powell hinted at a slower pace of interest rate hikes going forward, citing that the current interest rates are ‘just below’ the levels considered ‘neutral’. Maintaining gains thereafter, the index closed near session highs at 2743.79, sharply higher by 61.62 points and gaining a solid 2.30% over previous session’s gains. Ten out of the eleven primary sectors closed the session higher, led by Technology and Consumer Discretionary.

THE DETAILS (The “How & Why”):

Treasury yields fell sharply lower across the board after Jerome Powell indicated that the current interest rates are historically low and are ‘just below’ the neutral level. Investors took that as a dovish signal, expecting that the central bank might slow down on its pace of rate hikes. The 10-year Treasury yield settled relatively unchanged for the day after several analysts suggested that Powell’s comments were less dovish than concluded by investors. Steepening of the yield curve benefited the Financials sector, closing broadly higher by 1.82%. 
Technology stocks had been the most beaten down over the last couple of months on fears of rising interest rates that could hurt valuations of some of these highly valued companies. Technology and Consumer Discretionary sectors benefited the most with easing of rate fear hikes, rising broadly by 3.44% and 3.23% respectively.
Cloud-based software company Salesforce.com Inc. was the best performer of the session, soaring 10.25% on beating third-quarter earnings estimates and posting a stronger-than-expected outlook, boosting other cloud-based businesses within the sector. Adobe Inc., Align Technology Inc. and Ansys Inc. were the other strong gainers, up 7.30%, 6.74% and 5.76%, respectively. 
Microsoft Corp. rose 3.71%, surpassing the market value of Apple Inc. on optimism of growing demand of cloud computing services. FAANG stocks also shrugged-off their recent weakness, rising on easing of rate hike fears. Amazon.com Inc. and Netflix Inc. were sharply higher by 6.09% and 6.01%.
Health Care, Industrials and Communication Services were the other notable outperformers of the session, up 2.46%, 2.40% and 2.12% respectively. The U.S. dollar index tumbled from its two-week highs following dovish comments by Powell, boosting prices of metals and commodities across the board. Freeport-McMoRan Inc. surged 6.49% to lead a 1.47% gain within the Materials sector.
All components within the Energy sector also traded higher for the day, despite oil prices sliding to their lowest level in over a year on reports of a tenth straight weekly rise in U.S. crude stockpiles. Utilities sector was the only drag on the index, down 0.12%, led by a 3.11% drop in SCANA Corp.
On the economic data front, the third-quarter GDP growth came in at an expected annualized rate of 3.5%. New home sales number for the month of October was below expectations at 544,000. Meanwhile, trade deficits widened 1.3% to $77.2 billion, compared to the expected figure
of $77.7 billion for the month of October.