Day Traders Diary


The stock market kicked off April on an upbeat note with the Nasdaq Composite (+1.6%) leading the charge. The S&P 500 (+0.7%) settled at a fresh record high of 1885.52 with eight sectors registering gains while the Dow Jones Industrial Average (+0.5%) lagged.
In the absence of notable pre-market data or earnings, the major averages began the day with a steady climb that was assisted by upbeat action in Europe, where markets in France, Germany, and Great Britain posted solid gains between 0.5% and 0.8%.
For the second day in a row, the Nasdaq began the day in the lead, maintaining its outperformance throughout the session. The early strength of biotechnology (IBB +2.2%) propelled the initial advance while the index was kept near its session high into the Afternoon by the daylong outperformance of the technology sector (+1.3%).
The tech sector received considerable support from several of its top components. The largest sector member, Apple (AAPL 541.65, +4.91), rose 0.9% while other large names like Cisco Systems (CSCO 23.10, +0.88), Google (GOOG 1134.89, +20.38), Oracle (ORCL 41.49, +0.58), and Qualcomm (QCOM 80.10, +1.24) gained between 1.4% and 3.9%.
Although the largest sector finished ahead of the broader market, that was not the case with all top-weighed groups. Financials (+0.4%) and energy (+0.5%) lagged while the discretionary space (+1.4%) finished in the lead.
The growth-sensitive discretionary sector was underpinned by momentum names like (AMZN 342.99, +6.62), Netflix (NFLX 364.69, +12.66), and (PCLN 1251.37, +59.48), all of which struggled in March, but started April on an upbeat note. Shares of Ford (F 16.32, +0.72) also contributed, gaining 4.6% after the company reported a 3.0% year-over-year increase in monthly sales.
On the countercyclical side, consumer staples (-0.1%), telecom services (+0.3%), and utilities (-0.7%) ended behind the broader market while health care settled in-line with the S&P 500.
With stocks holding gains throughout the session, participants did not show strong interest in volatility protection, sending the CBOE Volatility Index (VIX 13.10, -0.78) lower by 5.6%.
Treasuries registered modest losses with the benchmark 10-yr yield climbing four basis points to 2.76%.
Participation was on the light side as less than 700 million shares changed hands on the NYSE floor.
Today's economic data was limited to February Construction Spending and the March ISM Index:
Construction spending increased 0.1% in February after falling a downwardly revised 0.2% (from +0.1%) in January while the consensus expected an increase of 0.1%. Extreme winter weather conditions in January and February were blamed for a general downturn in economic data; however, construction, which should feel the brunt of the negative winter effects, was largely in-line with recent trends. Thus, there is no reason to expect construction spending to surge due to pent up demand in the near future.
The ISM Manufacturing Index increased to 53.7 in March from 53.2 in February. The consensus expected the index to increase to 54.0. Extreme winter weather conditions were blamed for a deterioration in the ISM Manufacturing Index in January. Yet, as temperatures returned to normal, the ISM Manufacturing Index remained well below its Q4 2013 averages. This tells us that weakness in manufacturing activities was likely not tied to the adverse weather, but rather caused by cyclical trends.
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while the March ADP Employment Change will be announced at 8:15 ET. The day's data will be topped off with the February Factory Orders report which is set for a 10:00 ET release.

Nasdaq Composite +2.2% YTD
Russell 2000 +2.2% YTD
S&P 500 +2.0% YTD
Dow Jones Industrial Average -0.3% YTD

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