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S&P 500 TODAY – THURSDAY 07/05
THE GIST (“THE WHAT”)
The S&P 500 index opened higher as trade tensions eased following news that the European Union and U.S. officials could potentially eliminate tariffs on auto imports. Technology stocks led early gains, reversing Tuesday’s losses as semiconductor stocks outperformed.
While the index pulled back ahead of FOMC minutes release in the afternoon session, highlighting a possible adverse effect of trade restrictions and tariffs on the global economic growth, bullish sentiment gained momentum as investors digested the FOMC minutes that had otherwise no notable surprises. The index ended a broad based rally near session highs at 2736.61, up 23.39 points and gaining 0.86% over previous day’s close.
THE DETAILS (The “How & Why”):
Stocks of automakers climbed higher, lifting the broader Consumer Discretionary sector by 0.56% as trade tensions softened after the German Chancellor Angela Merkel said that she would lower tariffs on American car imports in lieu of the Trump administration abandoning threats of slapping tariffs on European cars.
Technology stocks led the index with a solid 1.46% gain as semiconductor stocks rallied in today’s session. Qorvo Inc., a supplier of Apple Inc. was the best performing stock in the index, up 5.66% after an analyst at KeyBanc Capital Markets upgraded the ratings of the company to overweight citing a growing iPhone demand in China.
Conagra Brand Inc., Newell Brands Inc. and Kellogg Co. were amongst the top gainers in the index, up by 3.70%, 3.39% and 3.17% respectively, lifting the broader Consumer Staples sector by 1.46%. Real Estate, Health Care, Materials and Industrials sectors also added to the day’s gains in today’s relief rally, rising 1.36%, 1.05%, 0.96% and 0.51%, respectively. Telecommunication sector also extended their Tuesday’s rally, gaining 0.40% led by a 3.71% rise in stocks of Qualcomm Inc.
Financials stocks reversed some of Tuesday’s losses, gaining a slight 0.26% as yields rose following FOMC minutes release that reiterated the Federal Reserve’s commitments towards a gradual rate hike. Meanwhile, Utilities stocks also rose 0.63% extending last session’s gains in today’s broad based rally.
Energy was the only sector ending the day in losses, shedding a slight 0.16% after leading the broader index in Tuesday’s session. Oil prices fell to their week’s low after Saudi Arabia lowered their oil prices in response to President Trump’s recent demand aimed at OPEC to reduce oil prices immediately.
On the economic data front, according to the ADP Employment report, while the private sector added 177,000 jobs in June, as against the expected 190,000, the weekly Initial Jobless Claims came in at 231,000 compared to 225,000 indicating a tightening labor market. Meanwhile, the HIS Markit U.S. Business Activity index came in at 56.5 in June, indicating a growing business activity and a resilient economy.