S&P 500
THE GIST (“THE WHAT”)

Extending Friday’s gains, the S&P 500 index opened 12.25 points above last week’s close, finally breaking out of the 2700 – 2740 range it was confined to since May 9. Shrugging off the trade war concerns for now, investors remained optimistic after a strong jobs report released Friday suggested a stronger-than-expected economy. The index rallied during the early trading hours, reaching the day’s high of 2749.16. Swinging between slight gains and losses and trading within a tight range, the index closed the session at a 12-week high at 2746.87, gaining 0.45%.

S&P 500 Testing 2750-40


THE DETAILS (The “How & Why”):

Impressive jobs report for the month of May released on Friday kept the bulls inspired during Monday’s session, pushing the index through a very strong resistance level at 2740.  Early morning gains were supported by Technology stocks led by Apple Inc. and Microsoft Corp. Apple Inc. rallied to a record high after unveiling its latest operating system iOS 12  on the first day of its Worldwide Developer Conference. Meanwhile, Microsoft Corp. gained after confirming its plan to acquire GitHub, a developer-tools platform, for $7.5 billion.


Consumer Discretionary was the best performing sector after Evercore ISI double-upgraded its ratings of Macy’s Inc. Growing economy and increased cash flow in the hand of consumers will have a positive impact of retail sector. Under Armour Inc. and Target Corp. were the top performers in the index, gaining 6.32% and 4.88% respectively. Defensive stocks like Utilities shed 0.85%, while Financials gained 0.29% as Treasury yields rose for the second consecutive day. The 10-year Treasury yields settled at 2.94%.

Energy was the worst performing sector, losing 0.92% as oil prices fell to a two-month low. Industrials and Telecommunications stocks also remained under pressure as trade tensions showed no sign of easing after the Trump administration decided to impose tariffs despite a joint statement released by six non-U.S. G-7 countries, criticizing the latest steel and aluminum import tariffs. China also announced that it will not enter into any agreement to increase its purchase of U.S. products unless the administration assures that it will not impose tariffs on Chinese imports. However, concerns of a full-blown trade war were overshadowed by investor optimism following impressive economic data released last week.