Day Traders Diary

4/1/15

The major averages kicked off April with a retreat that sent the S&P 500 lower by 0.4%. The benchmark index settled in-line with the Dow Jones Industrial Average and the Nasdaq Composite, with the latter catching up during the final hour.

Equity indices spent the entire day in the red and could not rally following upbeat economic data from overseas. In fact, S&P 500 futures tumbled nearly 20 points last evening after China reported its first expansionary Manufacturing PMI (50.1; expected 49.7) in three months. Similar to China, most Manufacturing PMI readings from Europe also surpassed estimates with the region-wide reading rising to 52.2 (expected 51.9).

Interestingly, S&P 500 futures rallied off their overnight lows, but could not climb above the spot where the overnight selling commenced. Once the cash session began, the S&P 500 quickly returned into the neighborhood of its overnight low.

The benchmark index managed to erase half of its opening decline, but eight sectors finished the day in negative territory. The heavily-weighted health care sector (-1.2%) was the weakest performer and the only group that lost more than 1.0%. Large cap sector components struggled across the board while high-beta biotech names also lagged. The iShares Nasdaq Biotechnology ETF (IBB 340.08, -3.35) lost 1.0%. Unlike health care, the remaining countercyclical groups outperformed with telecom services (+0.8%) ending in the lead while consumer staples (+0.1%) and utilities (+0.1%) settled near their flat lines.

As for growth-sensitive groups, energy (+0.2%) and materials (+0.1%) eked out slim gains while technology (-0.4%) and industrials (-0.8%) kept the market under pressure.

The energy sector was underpinned by crude oil, which spiked 5.2% to $50.09/bbl after the latest EIA inventory report showed a larger than expected build. In addition, reports of a rig fire in the Gulf of Mexico provided additional support. For its part, the energy sector settled on its low after giving up its opening gain.

Elsewhere, the technology sector was pressured by chipmakers while most large cap components also struggled. The PHLX Semiconductor Index fell 0.6% while Micron (MU 27.13, 0.00) ended flat ahead of its quarterly report.

Also of note, the industrial sector owed its underperformance to transport stocks. The Dow Jones Transportation Average slumped 0.8% with airlines leading the decline after Deutsche Bank downgraded Delta Air Lines (DAL 43.26, -1.70), American Airlines (AAL 50.44, -2.34), and United Continental (UAL 64.01, -3.24).

Unlike equities, Treasuries climbed throughout the morning and spent the afternoon near their highs, sending the 10-yr yield lower by seven basis points to 1.87%.

Today's participation was ahead of recent averages with roughly 780 million shares changing hands at the NYSE floor.

Economic data included ISM Index, Construction Spending, ADP Employment, and MBA Mortgage Index:

The ADP National Employment Report revealed that employment in the nonfarm private business sector rose by 189K in March while the Briefing.com consensus expected an increase of 225K 

The February reading was revised up to 214,000 from 212,000

The ISM Manufacturing Index declined to 51.5 in March from 52.9 in February while the Briefing.com consensus expected a decrease to 52.5 

Nearly all of the regional manufacturing surveys pointed toward a sharp deceleration in the national manufacturing index so the drop in the ISM Index shouldn't have been much of a surprise

Production levels actually improved, albeit by a very small margin, as the related index increased to 53.8 in March from 53.7 in February

Construction spending declined 0.1% in February after declining a downwardly revised 1.7% (from -1.1%) in January while the Briefing.com consensus expected a decline of 0.3% 

The unseasonably harsh winter weather conditions, which were blamed for a significant downturn in new housing starts, had little to no effect on overall construction levels 

Total private construction increased 0.2% in February after declining 1.1% in January

The weekly MBA Mortgage Index rose 4.6% to follow last week's 9.5% spike

Tomorrow, the Challenger Job Cuts report for March will be released at 7:30 ET while Initial Claims (Briefing.com consensus 285K) and the February Trade Balance report (consensus -$42.00 billion) will cross the wires at 8:30 ET. The day's data will be topped off with the Factory Orders report for February (consensus -0.5%).

Nasdaq Composite +3.0% YTD

Russell 2000 +4.0% YTD

S&P 500 UNCH YTD

Dow Jones Industrial Average -0.7% YTD