THE GIST (“THE WHAT”)
Struggling for direction and trading mostly sideways ahead of the key economic data this week, the S&P 500 index closed today’s choppy session mostly unchanged at 4376.85, down 1.55 points (-0.04%). Defensive utilities were the biggest laggard amid expectations of rising interest rates following hawkish comments by Fed Chair Powell.
Note: Our daily “S&P 500 Trading plan” will be posted around 9:30/10:00am EDT, every trading day.
Trading Plans for WED. 06/28: Markets Awaiting the PCE and FOMC – Day 3
For the last published Results of the Morning Trading Plans, please click here
THE DETAILS (The “How & Why”):
Fed Chair Jerome Powell alluded to further rate hikes this year as inflation remains sticky and not nearing the Fed’s 2% target rate anytime soon, not ruling out two consecutive rate hikes during the remaining part of the year. ECB President Lagarde, in her comments also indicated that rate hike next month is very likely. The S&P 500 index pulled back in the afternoon session on hitting the day’s high at 4390.35.
Chip stocks pulled back, led by a 1.81% decline in NVIDIA Corp following reports that the Biden administration is considering restricting exports and sales of AI chips to China. Analog Devices, Microchip Technology, Applied Materials, Lam Research and Intel all closed more than 1% each.
Meanwhile, Fed’s annual stress test of major banks showed resilience within the banking sector and suggested that the big banks could weather a severe recession with sufficient safeguards in place.
Limiting the day’s losses, energy stocks were amongst the biggest gainers alongside higher oil prices amid reports of more-than-expected drop in oil inventories. Cruise stocks were the best performers of the session. Carnival Corp and Norwegian Cruise Line Holdings soared 8.8% and 7.55%, respectively following better-than-feared earnings results and stock upgrades by Citigroup.