THE GIST (“THE WHAT”)
The S&P 500 index broke below its 50-day moving average, a closely watched gauge of momentum, for the first time since March, led by weakness in bank stocks. Losses accelerated during the last hour of the session alongside rising yields. The index closed the session near day’s lows at 4437.85, down 51.86 points (-1.16%).
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Trading Plans for TUE. 08/15: Back to the Basics, and the Reality?
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THE DETAILS (The “How & Why”):
The S&P 500 index fell to a one-month low as yields rose following better-than-expected retail sales data, raising odds of Fed’s ‘higher-for-longer’ interest rate policy. Banks stocks were the biggest drag on the index after Fitch Ratings warned that it could reevaluate and further downgrade the sector. Comerica, Citizens Financial Group, M&T Bank, and Zions Bancorp fell more than 4% each. KeyCorp, Truist Financial, Fifth Third Bancorp, and Bank of America all shed more than -3%.
Oil prices fell amid growing concerns of China’s dwindling economy, sending energy stocks lower across the board. Refining stocks were downgraded by Bank of America Global Research, sending Marathon Petroleum, Phillips 66 and Valero Energy all lower by more than 2% each. Copper prices also dropped to a one-and-a-half month low, hurting mining stocks. Freeport McMoran and Newmont fell 3% each.
In economic news, Jul retail sales jumped more than expected, while Aug NAHB housing market index declined unexpectedly. Losses within in the S&P 500 index gained momentum during the last hour of the session following hawkish comments from Minneapolis Fed President Kashkari, who eluded that the Fed may not be done raising interest rates. The 10-year treasury yield jumped to a nine-and-a-half month high of 4.268%, settling 2.6 basis point higher at 4.217%. Interest-rate sensitive mega-cap technology stocks also weighed down on the broader market.
Discover Financial Services closed down more than -9% to lead losers in the S&P 500 after CEO Hochschild resigned effective immediately. Amazon, Tesla and Microsoft closed more than 2% each.