TODAY IN THE MARKETS - WED, 5/23

S&P 500 

THE GIST (The "What"):

Extending yesterday’s losses the S&P 500 index opened the session down 10.24 points as skepticism over the US–China trade agreement grew after President Trump told reporters that the current state of talks appear “to hard to get done” while also casting doubts on his upcoming summit with North Korea leader Kim Jong Un. However, after the release of FOMC minutes at 2pm EDT indicated that the Federal Reserve will not get aggressive in interest rate hikes, the day's losses were erased and the index rallied to end the session at 2,733.29, gaining 0.32% and 8.85 points above previous day’s close. 


As mentioned in the outlook for tomorrow, the consolidation forecast last night can be deemed as completed today.

THE DETAILS (The "How & Why"):

The index traded mostly lower but holding onto the support level of around 2710 (as alerted in the real time commentary this morning) ahead of the release of FOMC meeting minutes due in the afternoon as investors looked for clues on the pace of future rate hikes expecting an increase in fiscal stimulus after President Trump indicated a possibility of additional tax cuts before November.
Financial stocks led early session losses after the Congress passed a plan to repeal 2010 Dodd- Frank Act, exempting small and medium sized banks from the strictest regulations passed post the 2008 financial crisis. The 10 –year yield pulled back after the release of FOMC minutes, settling at 2.995%, falling below the psychologically important 3% mark leading the Financials sector to be the biggest drag in the index with a 0.60% loss.

Industrials continued to be battered as investors digested the latest development around US–China trade tensions, albeit erasing some losses during the final hour of trading, losing 0.15% intraday. Energy stocks also fell for the second straight day as crude oil prices slumped on the back of an increase in U.S. crude stockpiles coupled with the expectation that OPEC might lift their oil output ahead of supply shortage from Iran and Venezuela. 

Tiffany & Co. and Ralph Lauren Corp. were the best performers gaining 23.39% and 14.34% respectively, on the back of solid performance that topped estimates. On the economic data front, the IHS Markit U.S. Manufacturing Managers index for May was up 56.6 from 56.5 last month, indicating economic expansion. Meanwhile, new-home sales in April came out below expectations at a seasonally adjusted rate of 662,000.