THE GIST (“THE WHAT”)
Oscillating between gains and losses after the Fed issued its widely expected rate hike pause, the S&P 500 index managed to eke out slight gains, closing the choppy session at 4372.58, up 3.56 points (0.08%). Modest gains during the early part of the trading session fizzled after the Fed released its decision to pause the rate hike cycle but signaled that rates could stay higher for longer and raised its target rate to 5.6% from the earlier 5.25% by the end of 2023, catching the markets off-guard.
Note: Our daily “S&P 500 Trading plan” will be posted around 9:30/10:00am EDT, every trading day.
Trading Plans for Tue 06/13: Celebrating the Lowest High Inflation Numbers?
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THE DETAILS (The “How & Why”):
The index rallied at the open following the PPI data for the month of May that suggested that price pressures slowed more-than-expected. In his post-FOMC press conference, Powell reiterated his stance that the continued stretch of strong economic data suggests that beating inflation might require more tightening to tame the sticky inflation.
Bond yields moved lower with the 10-year Treasury bond settling at 3.80%, down 1.3 basis points. The Treasury yield curve that measures the gap between the 2-years and 10-years Treasury yields has now steepened to 90.9 basis points. Meanwhile, oil prices remained near their lowest levels of the year amid growing global recessionary concerns, pushing energy stocks lower.
Semiconductor stocks extended their gains led by a 4.92% jump in Intel Corp. Nvidia and Broadcom rose more than 3% each. Oracle also gained 4.79% after Goldman Sachs upgraded the software giant following solid earnings beat.
On the other hand, Humana led the day’s losses, plunging 11.24% after the insurance provider said that seniors have been catching up on procedures that were delayed during the pandemic, pushing costs higher for insurers. UnitedHealth Group also fell 6%. Regional banks also gave up previous session’s gains after Zions Bancorp issued a warning that its net interest margin could fall this quarter. Zion Bancorp, Comerica and KeyCorp all closed lower by 5%.