S&P 500 TODAY, TUE. 05/22 - THE WHAT, HOW AND WHY:

Riding on Monday’s optimism, the index opened with slight gains (up 5 points) led by the Industrial stocks. Early morning gains lost steam on reaching the day’s high at 2,742.24 following mixed signals from the White House around U.S.-China trade policies. Trading within a narrow range while attempting to hold on to the gains, the index accelerated the loss in the final hour of the session as President Trump casted his doubts on the historic summit with North Korea. With only 4 primary sectors ending the day with gains, the index closed near session low at 2,724.44, down 8.57 points, losing 0.31%. 

Industrial stocks extended their Monday’s rally during session opening, further supported by the announcement of a cut in import duties by the Chinese government on passenger cars from 25% to 15%, lifting Auto stocks along. Technology sector also received a boost as both countries indicated that they were nearing an agreement to settle the ZTE Corp controversy. But gains reversed as the optimism faded after President Trump announced his displeasure with the recent trade talks.

Energy was the worst performing sector, losing 1.28% as crude oil prices retreated from their multi-year high levels, followed by a 1.25% loss in Industrials sector. Weaker third quarter guidance due to rising costs by Kohl’s and Toll Brothers Inc. also weighed down on investor sentiments. Steel stocks however recovered from their Monday’s slump after U.S. announced heavy duties on Chinese steel shipped from Vietnam while maintaining the previously imposed duties. Financials were the top gainers in the index, gaining 0.59% despite a drop in Treasury yields as investors look forward to the unwinding of the 2010 Dodd-Frank regulation. 

S&P 500 OUTLOOK and TRADING PLAN for TOMORROW, WED. 05/23