Day Traders Diary


The major averages ended today's session with modest losses. The S&P 500 shed 0.4% while the tech-heavy Nasdaq lost 0.7%.

The bulk of today's selling occurred at the open as three points of concern sent investors in search of safety. Headlines from Asia indicated North Korea has not toned down its war rhetoric and South Korean officials confirmed that the North has moved a pair of mid-range missiles to its east coast.

In addition to the Korean concerns pressuring the broader market, disappointing second quarter guidance from F5 Networks (FFIV 73.21, -17.21) contributed to the relative weakness of the tech sector, which ended as the day's biggest laggard.

While the two items pressured index futures in pre-market trade, a disappointing March nonfarm payrolls report ensured a sharply lower start to the cash session.

Nonfarm payrolls added just 88,000 new jobs in March. That was down from an upwardly revised 268,000 (from 236,000) additions in February and was the smallest increase in jobs since June 2012. The consensus expected payrolls to add 192,000 jobs.

Although the three headwinds caused the S&P 500 to start lower by 1.3%, the benchmark average notched its lows during the opening minute before spending the remainder of the day in a steady climb.

The morning developments sparked a safety bid across the Treasury complex. As a result, the 10-yr yield fell to its lows before recovering three basis points into the close. However, Treasuries ended near their best levels of the week with the 10-yr yield down 17 basis points at 1.70%.

The technology sector felt the brunt of today's selling pressure as F5 Networks' cautious guidance weighed on other networking companies. In addition, large cap tech names saw outsized losses as well. The largest tech component, Apple (AAPL 423.20, -4.52), lost 1.1%, and settled near its 52-week low. Notably, chipmakers underperformed in early trade, but finished the day ahead of the tech sector. The PHLX Semiconductor Index shed 0.5%.

Although growth-oriented sectors were among the biggest decliners in early trade, those groups were able to climb off their lows. Financials, industrials, and materials outperformed the defensively-minded consumer staples and health care sectors.

It should be noted that health care and consumer staples are the top performing sectors year-to-date, therefore some profit taking may have played a part in their underperformance today.

On the upside, telecoms and utilities settled in the black. The SPDR Utilities Select Sector ETF (XLU 39.57, +0.17) added 0.4%, and was the top performing sector ETF as investors sought higher-yielding equities.

While the broader market finished well off its lows, the Dow Jones Transportation Average was able to stage a stunning reversal. The bellwether complex was down as much as 2.2% at the start of the session before ending with a gain of 0.5%. Truckers were among the top index performers as Con-way (CNW 34.01, +0.96) advanced 2.9%.

Looking back at the day's final sector performance, technology (-1.0%), consumer staples (-0.7%), and health care (-0.6%) were among the biggest laggards. Meanwhile, utilities (+0.4%), telecom (+0.4%), energy (UNCH), and industrials (-0.2%) outperformed.

Reviewing today's remaining economic data, private nonfarm payrolls rose 95,000, but that was still well below consensus forecasts (210,000), and what was added in February (254,000).

The unemployment rate dipped to 7.6% in March from 7.7% in February. The decline in the unemployment rate, however, was not due to job growth. The labor force participation rate dropped to levels not seen since the late 1970s and caused the unemployment rate to decline. If the labor force participation rate had remained at February levels, the unemployment rate would have increased to 7.9%.

The U.S. trade deficit narrowed in February, dropping from $44.5 billion in January to $43.0 billion. The consensus expected the deficit to increase slightly to $44.7 billion.

Consumer credit increased by $18.1 billion in February after increasing a downwardly revised $12.7 billion (from $16.2 billion) in January. The consensus expected consumer credit to increase by $14.0 billion.

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