Note: Our nightly “S&P 500 Outlook,Forecast, and Trading plan for Wed 06/27” – please check back later (usually published around 10:30pm EDT on Tuesday).
S&P 500 TODAY – TUE 06/26
THE GIST (“THE WHAT”)
Led by Energy stocks, the S&P 500 index attempted to rebound from its steepest one-day decline in two months, registering the day’s high at 2732.91 (just about two points away from the trading plan’s level of our intraday, aggressive models). Optimism was however muted as investors remained cautious with the trade tension simmering in the background. Pulling back during the last half hour of the session, the index closed off session highs at 2723.06, up 5.99 and gaining 0.22% over previous day’s close.
It bounced off the key technical indicator of 50 DMA (now at 2716.95), holding on to it throughout the session after breaching it during the Monday’s broad-based sell-off. The index has now fallen back into the 2700 – 2743 range it had been confined to for the most part of the month of May. The market’s fear gauge, CBOE VIX also pulled back to 15.92 after spiking to a one-month high of 17.33 in Monday’s session.
THE DETAILS (The “How & Why”):
Oil prices surged in Tuesday’s session, lifting the broader Energy sector by 1.40% to lead the day’s advances. In a bid to toughen its stand on Iran, the Trump administration announced Tuesday that it expects all countries to cut back on their oil imports from Iran or risk sanctions. Oil prices were up by more than 3% on concerns of supply shortages that could be worsened by rising supply disruptions from Venezuela and Libya.
Technology sector erased some of Monday’s losses, gaining a modest 0.48% led by FANG stocks that found their ground after a major sell-off in previous session. Industrials and Materials sectors also gained 0.33% and 0.36% respectively in today’s relief rally. Industrial conglomerate General Electric Co. was the top gainer in the index, up 7.76% after announcing its plan to spin-off its healthcare and oil business units.
Real Estate sector was up by a decent 0.51%, led by a 4.86% gain in stocks of Lennar Corp. after reporting better-than-expected second quarter estimates. Sentiments around the sector was further boosted following a news release by a company Executive, stating that “Concerns about rising interest rates and construction costs have been offset by low unemployment and increasing wages, combined with short supply based on years of underproduction of new homes”.
Consumer Staples and Utilities sectors shed 0.45% and 0.01%, respectively. These were the only two sectors that were gainers in Monday’s sell-off. Further offsetting day’s gains were weakness in Telecommunications and Health-care sectors that were down by 0.42% and 0.28% respectively. With the 10-year Treasury yield settling mostly unchanged at 2.886%, the broader Financials sector was down by 0.37%.
On the economic data front, the S&P/Case-Shiller National Index was up 6.6% annually in April. While the Consumer Confidence Index fell from a revised 128.8 in May to 126.4 in June, indicating investors’ pessimism over the current rate of economic growth that might not be sustainable over the coming quarters.