THE GIST (“THE WHAT”)
Easing debt default concerns and increasing odds of June Fed rate pause boosted the S&P 500 index higher. The index retook the 4200 level once again to close decisively above it at 4221.01, up 41.17 points (0.98%).
Note: Our daily “S&P 500 Trading plan” will be posted around 9:30/10:00am EDT, every trading day.
Debt Ceiling Deadline Likely to Whipsaw the Markets
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THE DETAILS (The “How & Why”):
The House of Representatives passed a bill to raise the debt ceiling, easing default concerns. Easing inflation concerns following the May ISM price data that suggested a contraction in price gains increased the chances of a rate pause in June. Tech stocks rallied alongside falling yields. The 10-year Treasury yield hit a 2-week low of 3.563%, settling lower at 3.605%. ON Semiconductor, NVIDIA and Marvell Technology jumped more than 4% each.
Disappointing earning capped the day’s strong gains. Dollar General slumped 19.51% after missing sales expectations and issuing a lower guidance. Salesforce.com also declined 4.69% after the software giant issued a dismal outlook on the back of higher-than-expected capital costs and falling demand for consulting deals.
Lucid Group was another major decliner of the session, tumbling 16% after the EV company announced a $3 billion common stock offering. Advanced Auto Parts also extended its previous session’s sharp losses following stock downgrade by JP Morgan Chase and Bank of America.
Amid growing odds of a Fed rate pause, investors will be keenly awaiting tomorrow’ jobs report, looking for cues about Fed’s next policy decision.