THE GIST (“THE WHAT”)
Rebound in technology stocks lifted the broader market. The S&P 500 index fell during the early hours as treasury yields hit a 16-year high ahead of the keenly awaited Federal Reserve meeting on Friday at Jackson Hole, Wyoming. But grinding higher during the afternoon session alongside a rally in chip stocks, the index managed to close the session with a modest gain of 30.06 points at 4399.76, up 0.69% over the previous session.
Note: Our daily “S&P 500 Trading plan” will be posted around 9:30/10:00am EDT, every trading day.
Trading Plans for MON. 08/21 – Sideways Between Key Levels
For the last published Results of the Morning Trading Plans, please click here
THE DETAILS (The “How & Why”):
The 10-year Treasury yield hit its highest level since November 2007, settling 8.1 basis point higher at 4.336%. Investors are bracing for Fed Chair Jerome Powell’s speech at Jackson Hole Symposium. Concerns that the Fed might keep interest rates higher for longer has pushed yields near decade highs, stoking fears that higher rates could push the economy into deep recession. Markets are broadly expecting that the Fed could be done with its rate hikes by November.
In an attempt to boost its struggling economy, China’s central bank trimmed its one-year lending rate by 10 basis points while leaving the five-year rate unchanged. Analysts were expecting a 15 basis points cut as China’s economy continues to lose steam in the wake of slumping property market and tumbling credit growth. The index gave up early morning gains following lackluster Asian markets overnight.
Chip stocks and FANG stocks got a boost from an 8.5% rally in Nvidia Corp ahead of its highly awaited quarterly results that could dictate the direction of the overall market. KeyBanc Capital Markets raised its price target of Nvidia from $550 to $620, lifting the entire sector in-tandem. Applied Materials, Broadcom, and Marvell Technology gained more than 4% each. Advanced Micro Devices, NXP Semiconductors, Lam Research, and ON Semiconductor also closed up higher by more than 2% each.
Palo Alto Networks was the best performer of the session, soaring 14.8% and lifting the cybersecurity space on reporting a stronger-than-expected fiscal year forecast. CrowdStrike Holdings and Zscaler also jumped 4%. Moderna was another strong performer, gaining 9.3% following reports that the biotech-giant’s huge cash position and its recent stock price decline make it an appealing buy.
On the bearish side, Insulet Corporation led the decliners within the S&P 500 index, falling 4.2% on the back of stock downgrades. Estee Lauder and Newell Brands were the other decliners on the back of stock price downgrades.