THE GIST (“THE WHAT”)
Extending previous session’s decline, the S&P 500 index fell at the open following stronger-than-expected U.S. employment report and ISM services data that reinforced the hawkish Fed outlook of an aggressive monetary policy. Finding support at the day’s low of 4385.05, the index however bounced back to claw back some of the day’s losses to close at 4411.60, down 35.21 points (0.79%).
Note: Our daily “S&P 500 Trading plan” will be posted around 9:30/10:00am EDT, every trading day.
Trading Plans for THU. 07/06: Tight Job Market, Rising Yields…
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THE DETAILS (The “How & Why”):
A blowout June ADP employment report signaled strength in the labor market, coming in at a 4-month high. Employers added 497,000 private jobs that were well above the expected addition of 225,000. The 10-year Treasury note yield jumped to a 4-month high of 4.043%. Homebuilder stocks fell across the board alongside rising mortgage rates. DR Horton, Lennar Corp, PulteGroup, and Toll Brothers all fell more than 1% each.
All 11 sectors within the index closed lower for the day amid worries of rising interest rates. Energy was the worst performing sector alongside falling oil prices, led by a 3.75% drop in Exxon Mobil Corp after the company signaled a sharp drop in profits citing weakening refining margins. ConocoPhillips and Hess Corp also closed more than 3% lower. Bank stocks also traded lower with Citigroup, Morgan Stanley and Bank of America falling more than 2% each.
Bucking the trend, BorgWarner was the best performer of the session, jumping 4% following analysts upgrades after the automotive supplier announced the spin-off of its Fuel Systems and Aftermarket segments into a separate, publicly-traded company named PHINIA.