Note: Our nightly “S&P 500 Outlook,Forecast, and Trading plan for tomorrow” – (usually published between 8:30pm EDT and 10:30pm EDT).
S&P 500 TODAY
THE GIST (“THE WHAT”)
The S&P 500 index traded within a very tight range for most part of the Tuesday’s session, registering the day’s high at 2789.80 as investors shifted their focus away from the historic, albeit uneventful North Korean summit towards a series of potentially market moving policy decision announcement by the Federal Reserve due Wednesday 2:00 pm EDT.
Entering into a negative territory for a brief moment during the late afternoon session, the index bounced back from the day’s low at 2778.78, ending the session up 4.85 points at 2786.85, gaining a slight 0.17% over the previous day’s close. Closing higher for the third straight day, the index has now retraced back to the mid-March correction.
THE DETAILS (The “How & Why”):
The landmark summit between President Trump and the North Korean leader Kim Jong Un received a subdued response from investors. The leaders signed an historic agreement, although lacking in key details, to work towards a complete denuclearization of the Korean Peninsula.
Utilities sector led the day’s advances, gaining 1.29%. Technology sector also bounced back from last week’s volatility as FANG stocks soared in Tuesday’s session. Twitter Inc. was the top performer in the index, gaining 5% after JP Morgan raised the social media company’s price target from $39 to $50 citing improving advertising sales.
Energy sector was the biggest drag in the index, losing 0.75% as global crude oil prices eased following a monthly report from the OPEC, indicating a 35,000 b/d month-on-month increase in oil production. Financials sectors also shed 0.33% as yields held steady ahead of the Federal Reserve’s interest rate hike decision due tomorrow. The 10-year Treasury yield settled at 2.96%.
The Labor Department released the Consumer Price Index (CPI) data, suggesting moderate inflationary pressures. The index rose 0.2% in May, in line with the expectations as oil prices increased at a slower pace. While the market expects a quarter-point rate hike by Federal Reserve tomorrow, investors will be looking for clues on whether the central bank plans to get more aggressive in its pace of rate hikes, given the tightening labor conditions and rising inflation.