Note: Our nightly “S&P 500 Outlook,Forecast, and Trading plan for Tues, 07/10” – please check back later (usually published around 9:30pm/10:00pm EDT on Mon).
S&P 500 TODAY – MON 07/09
THE GIST (“THE WHAT”)
Extending last week’s optimism and rallying strongly for the third straight day, the S&P 500 index opened with significant gains as investors focused on Friday’s strong economic data with no major news headlines on trade war front over the weekend. Led by strong gains in Financials and Industrial sectors, the index moved above key technical level of 20 DMA (now at 2755.60) following a successful retest of this level in the last session.
Holding on to the gains and maintaining a steady momentum, the index closed near session highs at 2784.17 (also near June high), up 24.02 points and gaining a modest 0.87% as investors look forward to the start of a strong quarterly earnings season later this week.
THE DETAILS (The “How & Why”):
Financial stocks were the prime drivers of today’s rally, gaining a solid 2.32% in the best day in over a month. The sector was up for the third day in a row after struggling last week on concerns of flattening yield curve that could potentially hurt margins of the banking industry. The sector got support from rising yields as investors sold off bonds in today’s risk-on mood lifting the yields across the board. The 10-year yield settled at 2.861%, up 3.7 basis points.
Industrials rose 1.81%, supporting today’s rally as investors shrugged off the ongoing trade tensions. Caterpillar Inc. was the second best gainer in the index, up 4.11%. Oil prices settled higher lifting the broader Energy sector. The sector rose 1.48%, led by a 4.57% rise in stocks of Noble Energy Inc. and a 3.89% rise in stocks of Marathon Oil Corp.
The broader Technology sector was up 0.82% as FANG stocks rose. Gains were however capped due to sell-off in Twitter Inc. The social media company was the worst performer in the index, losing 5.38% on news that the company had suspended close to 70 million fake accounts since the month of May. Materials and Health care sectors also extended last session gains, rising 0.94% and 0.65% respectively.
The day’s gains were capped by a major sell-off in Utilities stocks. The sector shed a 3.13%, dragged down by several electric utility companies that were also the biggest drag within the broader index, including PPL Corp. and First Energy Corp. Defensive sectors also gave back some of the last week’s gains with rising yields. Telecommunication, Real Estate and Consumer Staples shed 1.42%, 0.92% and 0.48% respectively.