Note: Our nightly “S&P 500 Outlook,Forecast, and Trading plan for Thursday, 06/28” – please check back later (usually published around 10:30pm EDT on Tuesday).

 S&P 500 TODAY – WED 06/27

THE GIST (“THE WHAT”)

The S&P 500 index opened higher after President Trump hinted a softening stance over Chinese Investments in American Technology firms, further fueled by Energy stocks that soared on the back of rising oil prices for the second straight day. The index however reversed trend midday after registering the day’s high at 2746.09, as Technology stocks slumped on trade policy uncertainties, weighing down on the broader index.
Trading within a wide range of our models’ repeatedly referenced broader range of 2700 – 2745, the index ended a very volatile session (gaining 0.74% in early session but ending with a 0.86% loss) near day’s lows falling sharply in the last hour. It also failed to hold on to a very strong support of 100 DMA, after successfully retesting it two times this week. With eight out of the eleven primary sectors ending the day lower, the index closed below the psychologically important 2700 level (but, only by 0.37 points away, which could prove to be a bear-trap tomorrow) and at May 31stlow, down 23.43 points at 2699.63. The Wall Street’s ‘fear index’, CBOE VIX spiked to a two-month high at 17.74.

 

THE DETAILS (The “How & Why”):

The index rallied in the early session after President Trump said he will let the CFIUS (Committee on Foreign Investment in the United States) to deal with the potential threats from the Chinese acquisition of American technology firms, suggesting his softening stance on China. Energy stocks led a broad-based rally in the early session.
A White House statement in the afternoon moderating the President’s stance sent the stocks plummeting on concerns of trade uncertainties. Technology stocks led the day’s decline, reversing early session gains and falling sharply by 1.45%. Semiconductor stocks were amongst the worst performers in the index.
Financials sector registered their thirteenth straight loss, as yields edged lower. The 10-year Treasury yield settled at 2.83%. Industrials and Materials sectors shed 0.79% and 0.36%, respectively as investors remained cautious with trade uncertainties building in the background. Health-care and Real Estate were also down 0.92% and 0.28%, respectively in today’s broad-based sell-off.
Falling yields however continue to benefit defensive Utilities stocks that gained 0.58% in today’s session. Consumer Staples however shed 0.26%, erasing early session gains, weighed down by a 7.27% decline in stocks of Conagra Brands Inc. after the company announced its plan to acquire Pinnacle Foods Inc. for $10.9 billion.
Meanwhile, Energy stocks extended Tuesday’s rally after the Trump administration threatened sanctions on any country that continues to import oil from Iran. The sector gained a solid 1.34% after the EIA (Energy Information Administration) reported a significant weekly decline in crude oil supplies by 9.9 million barrels. Several energy stocks were amongst the best performers of the day with Concho Resources Inc. being the top gainer in the index, up 4.62%.
On the economic data front, orders for durable goods fell for the second straight month by 0.6% primarily due to a drop in demand for new cars and trucks. U.S. pending-home sales fell 0.5% in May to 105.9. Meanwhile, the U.S. trade deficit in goods was down 3.7% in May.