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S&P 500 TODAY – THURSDAY 07/12
THE GIST (“THE WHAT”)
The S&P 500 index rebounded from Wednesday’s sell-off as Technology sector outperformed amid a lull in trade war. Trade war concerns eased a bit after China chose to hold off its retaliatory moves against the latest round of U.S. tariff plans as it deals with falling stock market and a weakening currency.
The index opened sharply higher led by Technology and Industrials stocks, registering the day’s high at 2799.22 (near March 13 high of 2801.94). Maintaining the optimism throughout the session, the index closed the session near day’s high at 2798.29, up 24.27 points and gaining a decent 0.87% over previous session close. In a broad-based relief rally, 10 out of 11 primary sectors ended the session with gains.
THE DETAILS (The “How & Why”):
Strong gains in the Technology sector helped catapult the index to fresh highs as investors bought at the dips. The sector was up 1.79% fueled by an 18.65% gain in CA Inc. following the news that Broadcom Inc. has agreed to buy the software company for $18.98 billion. Stocks of other software makers like Red Hat Inc. and Autodesk Inc. were amongst the best performers in today’s session. While CA Inc. was the top gainer in the index, chipmaker Broadcom Inc. was the worst performer in today’s session, losing 13.74% as investors doubted the potential synergies behind the deal.
Industrials gained lost ground in today’s session, up a strong 1.12% as trade war concerns eased. Stocks of defense contractors got a lift after President Trump suggested that European countries should increase their spending on defense. Airline companies also gained after Delta Air Lines reported better-than-expected quarterly results.
The broader Materials and Energy sectors erased some of yesterday’s losses, gaining 0.22% and 0.20%, respectively as commodities and oil prices stabilized after slumping in the previous session on falling global demand concerns with escalating trade tensions. Health care sector closed higher by 1.10%, led by a strong 4.12% gain in stocks of Intuitive Surgical Inc. Consumer discretionary, Telecommunications and Real Estate sectors also gained 0.67%, 0.52% and 0.20%, respectively in today’s relief rally.
The 10-year Treasury yields settled relatively unchanged at 2.846% following a choppy session after the Consumer Price Index numbers came in below market expectations at 2.9%. Financials sector was up a slight 0.19% as investors look forward to the earnings release tomorrow by big banks like JP Morgan Inc., Citigroup Inc. and Wells Forgo & Co. Limiting gains was a sharp 5.29% drop in stocks of Synchrony Financials after Walmart Inc. announced its plan of shifting its popular store card business to Capital One Financials. The sector has been underperforming the broader index over the last few months on concerns of flattening yield curve.
Consumer Staples shed 0.11% to be the only sector ending the day in losses. While Utility stocks gave back some of the previous session gains in the early session, the broader sector bounced back in the last trading hour to end the session with a slight gain of 0.09%.