Day Traders Diary

3/17/15

Happy St Patrick's Day.

The stock market ended the Tuesday session on a mixed note ahead of Wednesday's release of the latest policy directive from the Federal Reserve. The Nasdaq Composite added 0.2% while the S&P 500 and Dow Jones Industrial Average lost 0.3% and 0.7%, respectively.

Equity indices endured some selling in the early going, but the Nasdaq spent the day ahead of the broader market thanks to relative strength in the technology sector (+0.1%). Specifically, shares of Apple (AAPL 127.04, +2.09) climbed 1.7%, which underpinned the sector and the Nasdaq. Meanwhile, most large cap components struggled, which was also the case with high-beta chipmakers. The PHLX Semiconductor Index fell 0.7%. That being said, the daylong strength within the technology sector helped the broader market erase the bulk of its early decline.

The Nasdaq received another measure of support from biotechnology with the iShares Nasdaq Biotechnology ETF (IBB 356.25, +2.28) climbing 0.6% to a new record. However, the health care sector (-0.3%) could not turn positive.

Similarly, another influential sector—industrials (-0.4%)—ended in the red even though transport stocks displayed relative strength with the Dow Jones Transportation Average ending just below its flat line. The broader sector could not follow suit as the largest component—General Electric (GE 25.31, -0.14)—lost 0.6%.

Elsewhere among cyclical sectors, energy (-0.5%) settled among the laggards as crude oil faced continued pressure. The energy component fell 1.2% to $43.15/bbl after marking a session low at $42.75/bbl this morning. Crude oil endured a volatile day and made a brief appearance in the green while the Dollar Index (99.66, +0.06) spent the session near its unchanged level. However, the Dollar Index is likely to be active tomorrow when investors respond to the FOMC policy statement.

The main point of focus will be whether the Fed decides to keep its reference to remaining "patient" ahead of the first rate hike. In a recent appearance before the Senate Banking Committee, Fed Chair Janet Yellen said that removing the call for patience would open the door to a potential rate hike at any policy meeting that follows.

Treasuries held solid gains in the morning, but the 10-yr note cut its gain in half, sending the benchmark yield lower by two basis points to 2.06%.

Today's participation was below average with roughly 700 million shares changing hands at the NYSE floor.

Economic data was limited to February housing starts, which declined 17.0% to 897,000 from an upwardly revised 1.081 million (from 1.065 million) while the Briefing.com consensus expected a decline to 1.041 million. Record snowfall in the Northeast and extreme cold in the Midwest likely played a large part in curtailing new construction. Housing starts in these regions declined 45.0% in February, from 262,000 in January to 144,000. Those regions accounted for 64.0% of the entire February decline in housing starts.

Still, the weather can't be completely at fault. Poor underlying economic conditions likely caused some of the February pullback. For example, in the West region, warmer-than-normal temperatures should have helped offset some of the decline from the East, but that did not happen. Starts fell 18.2% to 239,000 in February from 292,000.

Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while the Federal Open Market Committee will release its latest policy statement at 14:00 ET.

Nasdaq Composite +4.3% YTD

Russell 2000 +3.2% YTD

S&P 500 +0.7% YTD

Dow Jones Industrial Average +0.2% YTD