Day Traders Diary

3/6/15

The major averages began the week on an upbeat note after shaking off their opening losses that were brought on by a disappointing jobs report for March. The S&P 500 spiked 0.7% while the Nasdaq Composite (+0.6%) followed not far behind. 

The Nonfarm Payrolls report for March was released on Friday and it disappointed on all fronts. Only 126,000 payrolls were added while the Briefing.com consensus expected a reading of 250,000. Since the cash market was closed on Friday, the news weighed on the futures market, sending futures on the S&P 500 down 20 points.

Index futures were able to cut their losses in half by today's opening bell and the S&P 500 erased a ten-point deficit just 15 minutes into the session. The index spent the rest of the day in a steady climb with all ten sectors logging gains. Once again, the market interpreted bad news as good, rallying on the belief that the disappointing jobs report will cause the Federal Reserve to postpone its first rate hike.

Three sectors posted gains of 1.0% or more with energy (+1.8%) spending the bulk of the session in the lead. The growth-sensitive sector trimmed its 2015 decline to 1.3% with significant help from crude oil, which surged 6.1% to $52.11/bbl. This morning, Saudi Arabia announced it will hike its prices for oil exports to Asia for the second consecutive month.

Interestingly, crude oil held its ground during afternoon action even as the Dollar Index (97.03, +0.48) erased roughly half of its decline from Friday. Meanwhile, Treasuries retraced their entire spike from Friday, sending the 10-yr yield higher by seven basis points to 1.90%.

Elsewhere, the top-weighted technology sector (+1.0%) began among the laggards, but finished ahead of most other groups. Large cap names did some heavy lifting with Microsoft (MSFT 41.54, +1.26) jumping 3.1% after Wells Fargo upgraded the stock to 'Outperform' from 'Market Perform.' Meanwhile, chipmakers underperformed with the PHLX Semiconductor Index adding 0.5%.

Also of note, the industrial sector (+0.8%) outperformed even as transport stocks struggled. The Dow Jones Transportation Average lost 0.4% with airlines pacing the decline amid today's increase in oil prices.

Over on the countercyclical side, consumer staples (+0.8%) and utilities (+1.3%) outperformed while telecom services (+0.4%) and health care (+0.1%) lagged. Biotechnology kept the health care sector under pressure with iShares Nasdaq Biotechnology ETF (IBB 338.85, -0.85) shedding 0.3%.

Today's participation was ahead of recent averages with more than 885 million shares changed hands at the NYSE floor.

Economic data was limited to Nonfarm Payrolls and ISM Services:

Nonfarm payrolls increased by only 126,000 in March to follow a downwardly revised 264,000 (from 295,000) in February. The Briefing.com Consensus expected an increase of 250,000 

That was the first time jobs growth did not exceed 200,000 since February 2014, and it was the smallest increase since 109,000 jobs were added in December 2013

Private payrolls increased by 129,000 jobs, down from a downwardly revised 264,000 (from 288,000) in February while the consensus expected the addition of 245,000 jobs.

Average hourly earnings increased by a solid 0.3% after increasing by only 0.1% in February, but those gains were offset a significant cut in the number of hours workers. The average workweek fell to 34.5 hours in March from 34.6 in February

Altogether, aggregate earnings increased by only 0.1% in March, down from a 0.3% increase in February, which is not sufficient to support consumption growth

The ISM Non-Manufacturing Index declined to 56.5 in March from 56.9 in February while the Briefing.com consensus expected no change

Tomorrow, the Job Openings and Labor Turnover Survey for February will be released at 10:00 ET while the February Consumer Credit report will cross the wires at 15:00 ET (consensus $12.50 billion).

Nasdaq Composite +3.8% YTD

Russell 2000 +4.7% YTD

S&P 500 +1.1% YTD

Dow Jones Industrial Average +0.3% YTD