S&P 500 TODAY
THE GIST (“THE WHAT”)
The S&P 500 index rallied to a two-month high, led by Financials stocks as yields inched up following remarks by ECB chief economist, indicating that the central bank is on track to discuss an eventual wind-down of its monthly bond buying program. Early morning gains led by blue-chip stocks were reversed as trade concerns kicked in, pulling the index down to the day’s low at 2748.46. However, it bounced back as Financials and Materials soared in the afternoon session leading the index to a fourth straight day of gains, closing near session highs at 2770.16, up 21.50 points and gaining 0.78%.
S&P 500 OUTLOOK for THU 06/07
THE DETAILS (The “How & Why”):
Trade tensions were back on the forefront during the morning session after Mexico announced retaliatory tariffs of 15% to 25% on imports of American products including pork, steel tubes and bourbon. Canada and European Union are also expected to announce their response to U.S. tariffs in the coming weeks. Strong gains in Financials and Materials however overshadowed trade concerns during the afternoon session.
Financials was the best performing sector, gaining 1.84% and reversing Tuesday’s losses as the 10-year Treasury yield moved closer to the psychologically important 3% mark, settling at 2.974%. Rising yields however hit Real Estate sector as rising mortgage rates and supply shortages continue to remain a concern.
Materials sector rallied for the second straight day, gaining 1.86% as metal prices continued their trend upwards. The day’s gains were however capped by major weakness in Utilities sector as rising yields lured investors away from defensive stocks. Utilities were the only sector ending the session in red, losing 2.13%.
Telecommunication sector got a major boost after the Trump administration indicated that it plans to allow ZTE Corp., a Chinese telecom-equipment maker to resume its purchases from American suppliers. This announcement came after China offered to buy U.S. goods valued close to $70 billion over the course of next year if the Trump administration abandons the recently proposed tariffs.
Energy sector gained 0.56% despite a slump in oil prices. Oil and gas producer, Devon Energy Corp. announced its plan to sell its stakes in EnLink Midstream for $3.13 billion. The company gained 5.57% intraday boosting the broader Energy sector. Good economic data also supported the bullish momentum in today’s session. U.S. trade deficit fell to a seven-month low as exports rose to record highs.