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S&P 500 TODAY – FRIDAY 06/29
THE GIST (“THE WHAT”)
Brushing aside trade tensions, the S&P 500 index rallied at the open, with Financials sector in the lead following an upbeat stress test result. Finding a strong resistance at 2745 level (the index has been confined within the 2700 – 2745 range for the 4th session in a row), the index held on to the gains, swinging between a very tight range after registering the day’s high at 2743.26.
Maintaining the latest trend of reversing the day’s trend in the last trading hour, the index pulled back dramatically to erase most of the day’s gains as trade war concerns weighed in, ending the session mostly unchanged at 2718.37, up only 2.06 points. While the index ended the week with a third straight weekly loss of 1.33% and a monthly loss of 0.59%, a very volatile second quarter however ended with a 2.93% gain.
THE DETAILS (The “How & Why”):
Energy stocks led the day’s advances with a 0.65% gain, erasing Thursday’s losses as oil prices rose for the fourth day in a row on the back on rising supply disruptions. Oil prices were also fueled this week after the Trump administration threatened to place sanctions on any country that will not reduce its Iranian oil imports. The sector was up 1.03% this week.
The broader Consumer Discretionary sector got a lift from a solid 11.13% rise in stocks of Nike Inc. Shares of the company soared to record highs after the company reported a better-than-expected sales growth in North America, coupled with a $15 billion buyback plan announcement. While the broader sector gained a slight 0.17% intraday, it was down by a sharp 1.87% this week as rising cost concerns continue to weigh down on future profit margins.
Materials and Industrials stocks also extended last session gains, up 0.23% and 0.20% respectively, as investors momentarily shrugged off trade war concerns. These sectors were net losers this week, shedding 0.80% and 1.35% respectively as investors remain cautious with trade tensions simmering in the background.
Financials extended Thursday’s gains, rallying at the open following an upbeat Comprehensive Capital Analysis and Review (CCAR) results by most of the banks. Sentiments around the sector were further boosted after several banks announced buybacks and dividend hikes after clearing the stress test.
Wells Fargo & Co. was amongst the best performing companies in the index, up 3.37%. Gains were however erased in the afternoon session on the back of profit taking. Yields settled mostly unchanged following data indicating that the core inflation hit the Federal Reserve’s 2% target for the first time in six years. The sector was the second worst performer this week, shedding 1.93% on concerns of flattening yield curve that threatens Banks’ profitability.
Day’s gains were offset by weakness in Telecommunications sector that was down by 0.15% after being the best performing sector in the previous session. The sector however gained 1.18% this week. Consumer Staples also shed 0.15%.
Technology sector was the worst performing sector this week, losing 2.19% as the sector suffered the investors’ brunt during the week on concerns that the latest sanctions on Chinese investment in American technology firms could limit valuable capital inflows to the industry.
