Note: Our nightly “S&P 500 Outlook,Forecast, and Trading plan for Tue 06/26” – please check back later (usually published around 10:30pm EDT on Monday).
S&P 500 TODAY – MON 06/25
THE GIST (“THE WHAT”)
In the biggest one day decline in two months, the S&P 500 index opened with significant losses as trade war concerns gripped the markets following overnight news that President Trump plans to restrict Chinese firms from investing in American technology firms. Fueled by a major sell-off in Technology and Energy sectors, the index breached key indicators of 50 DMA (now at 2716.04) and 100 DMA (now at 2702.99) causing potentially major damage to the technical charts.
The index however rebounded in the last hour of the session finding strong support at 50 DMA and closing off session lows at 2717.07, down 37.81 points and losing 1.37% over the previous day’s close. The index suffered a broad-based sell-off as markets feared that the increasing U.S. protectionist policies that are being met with retaliation by its key trading partners could slow down the synchronized global economic growth story. Nine out of the eleven primary sectors ended the session in losses.
THE DETAILS (The “How & Why”):
Technology sector suffered the investors’ brunt in today’s session, losing 2.28% as investors worried that the latest sanctions on Chinese investment in American technology firms could limit valuable capital inflows to the industry. Netflix Inc. led the decline in FANG stocks, losing 6.47% in its worst day in two years.
Today’s bearish sentiment was further fueled by a fall in oil prices after Russia backed the recent OPEC agreement to increase oil production by 1 million b/d. Energy stocks were down 2.20%. With trade tensions building, Industrials and Materials sectors shed 1.24% and 1.46% respectively, reversing their Friday’s gains.
Consumer Discretionary extended last week’s losses, led by Carnival Corp. which was the biggest loser in the index, down 7.85% after reporting a disappointing guidance for the fiscal year. Harley-Davidson Inc. was also amongst the worst performers in today’s session after the motorcycle company announced its plan to move its production out of the U.S. to avoid any retaliatory tariffs by the European Union.
Financial stocks shed a further 1.03% as yields continue edging lower with rising U.S. – China trade tensions. The 10-year Treasury yield settled at 2.883%, down a slight 1.3 basis point. Offsetting some of the day’s losses were gains in defensive sectors. Utilities and Consumer Staples were the only sectors ending the day in gains, up 1.65% and 0.44%, respectively. Campbell Soup Co. was the top gainer in the index, up a solid 9.40% following reports that Kraft Heinz Co. is interested in buying the soup company.