TODAY IN THE MARKETS - WED, 5/23

S&P 500 
THE GIST (The "What"):

The index rebounded after reaching the day’s low at 2707.38, erasing some of day’s losses and registering the day’s high at 2731.97 as investors digested these latest developments and as Industrials and Defensive stocks gained. With 7 out of

11 primary sectors ending the day lower, the index closed the session off lows at 2727.76, losing 0.20% (down 5.53 points).

THE DETAILS (The "How & Why"):

 Please check the outlook and forecast for tomorrow, Fri 5/25 below:


The S&P 500 index continues to be range bound between the 2700 and 2745 band, successfully testing the strong support level of its 100 DMA found at 2710 several times this month. Stocks were sent tumbling at the opening after President Trump called off his summit with North Korean leader Kim Jong Un which was due to take place on June 12. Several other news headlines also played in the background weighing down on the market sentiment during the early trading session.

Defensive stocks benefited from the latest developments in geopolitical and trade tensions, led by a rally in Raytheon Company. Industrial stocks also recovered from the sell-off experienced post the trade truce news between U.S and China gaining 0.60%. Meanwhile, global automakers stocks such as Volkswagen AG, Daimler AG and BMW AG fell after President Trump announced his decision to launch a national security investigation on cars imported into the U.S. in an attempt to renegotiate the NAFTA agreement. U.S. automakers such as Ford Motor Co. and General Motors, however, gained over this latest development.

Oil prices fell for the third straight day weighing down on the Energy sector and making it the biggest drag on the index, losing 1.67%. Financial sector lost 0.71% as the 10-year Treasury yield settled at 2.978%, staying below the psychologically important 3% mark. Rising mortgage rates coupled with surging home prices weighed down on the Real Estate sector.

On the economic front, the initial jobless claims reached the highest level in seven weeks at 234,000 as against the expected 220,000. Meanwhile, shortage of properties resulted in the existing home sales to come out below expectations.

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.