THE GIST (“THE WHAT”)
Strength in chip stocks lifted the broader S&P 500 index in today’s choppy trading. Gains were limited as yields jumped amid China’s looming property debt crisis. Gaining momentum during the last hour of the session, the index closed near day’s high at 4489.72, up 25.67 points (0.58%).
Note: Our daily “S&P 500 Trading plan” will be posted around 9:30/10:00am EDT, every trading day.
Trading Plans for MON. 08/14 – Back To The Basics?
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THE DETAILS (The “How & Why”):
The S&P 500 index opened lower following overnight reports of China’s property debt crisis after China’s biggest property developers, Country Garden Holdings, reportedly defaulted on its debt payment while seeking extension for its maturing bonds for the first time.
The index, however, got a lift alongside a rally in chip stocks led by a 7.1% jump in Nvidia after Morgan Stanley cited that the recent selloff in this AI beneficiary could be a good entry point ahead of its earnings release next week. Micron Technology soared 6.1%. Marvell Technology and Advanced Micro Devices also closed more than 4% each.
Capping the day’s gains was weakness in regional bank stocks amid reports that the FDIC is planning to impose long-term debt requirements on banks in an effort to cover capital losses. KeyCorp was the biggest decliner of the session, falling 4.7%, followed by Comerica, Citizens Financial Group and Truist Financial, all closing lower by more than 3%.
Bond yields jumped higher with the 10-year yield settling near nine-month high at 4.186% after the monthly survey from the New York Fed on consumer inflation expectations came in at its lowest level in almost two years at 3.55% in July, as against the expected 3.83%. Interest-sensitive REIT stocks and utilities were sold-off alongside rising yields.
Tesla also shed 1.19% after the EV giant announced fresh round of price cuts in China in an effort to gain market share in domestic market, stoking concerns that this recent move could restart price wars among all EV makers.