THE GIST (“THE WHAT”)
Rising yields and fears of contagion from China’s emerging property crisis kept sentiment low. Opening lower following reports of Chinese builder Evergrande’s bankruptcy, the S&P 500 index managed to claw back most of the day’s losses to close the session mostly flat at 4369.71, down fractionally by 0.65 point (-0.015%).
Note: Our daily “S&P 500 Trading plan” will be posted around 9:30/10:00am EDT, every trading day.
Trading Plans for FRI. 08/18 – Key Support Levels Broken
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THE DETAILS (The “How & Why”):
Stock prices remained under pressure after recent strong retail sales reports underscored the economy’s resilience, pushing yields to their highest level in more than 15 years amid growing odds of Fed’s ‘higher for longer’ interest rate policy. The 10-year Treasury yield rose for the fifth straight week to hit its highest level since 2007, settling at 4.253%, hurting interest-sensitive mega-cap technology stocks the most.
Yields fell slightly in today’s session, lifting defensive stocks like utilities and countering the losses in technology stocks. Energy sector led the day’s gains. Utilities and real estate stocks also traded higher for the day. On the earnings front, Ross Stores soared 5.01% after the discount retailer reported better-than-expected earnings and raised guidance for the remaining part of the year. Applied Materials was another strong gainer on the back of strong quarterly earnings, rising 3.68%. UBS raised the price target on Walmart after the retail giant reported stellar earnings, pushing its stock higher by 1.44%.
Amongst decliners, Keysight Technologies was the worst performer of the session, tumbling 13.78% following disappointing quarterly earnings and weaker-than-expected outlook. Deere & Co and Estee Lauder were other sharp decliners on missing earnings estimates, falling 5.28% and 3.31%, respectively.
Mining stocks extended losses amid concerns of contagion effect of faltering Chinese economy. Southern Copper fell 3.38%. Freeport-McMoRan and Newmont also gave up more than 1% each. With no major catalysts driving the markets today, big tech stocks failed to rebound with Microsoft, Alphabet, and Tesla all trading slightly lower for the day. Investors will be keenly looking forward for Nvidia’s earnings release next week along with Fed Chair Jerome Powell’s speech at the Jackson Hole economic symposium.