Day Traders Diary

4/28/15

The stock market ended the midweek session on a modestly lower note. The S&P 500 shed 0.4% while the Nasdaq Composite (-0.6%) underperformed throughout the session.

Equity indices struggled in the early going after the advance reading of Q1 GDP (0.2%; Briefing.com consensus 1.0%) missed expectations. However, that disappointment was partially offset by the FOMC directive, which did not stir concerns of a rate hike taking place in the near term. Instead, the FOMC reiterated that the current policy stance will remain appropriate until there is reasonable confidence among members that inflation will move back to the 2.0% objective.

Seven sectors registered losses while energy (+0.7%) outperformed throughout the session thanks to a 2.6% gain in crude oil, which settled at $58.52/bbl. The energy component was boosted by a storage report that showed a smaller than expected inventory build while dollar weakness also factored into the move higher. The Dollar Index (95.22, -0.88) fell 0.9%, registering its sixth consecutive decline. Most notably, the euro (1.1111) added 1.3% against the dollar.

On the flip side, countercyclical consumer staples (-0.8%) and health care (-0.8%) ended at the bottom of the leaderboard, but health care managed to cut its loss in half thanks to modest gains in the biotech space. The iShares Nasdaq Biotechnology ETF (IBB 344.81, +0.31) added 0.1% to snap its three-day skid, but could not close above its 50-day moving average (348.51), which served as resistance for the second day in a row. Meanwhile, the broader health care sector slumped under the weight of Express Scripts (ESRX 84.79, -2.71) and Humana (HUM 168.05, -13.06) after both reported earnings. Express Scripts reported in-line and narrowed its guidance while Humana missed expectations.

Elsewhere, the technology sector (-0.5%) ended a bit behind the broader market, but that masked a late afternoon spike in Salesforce.com (CRM 74.65, +7.76) after Bloomberg reported the company has hired bankers to discuss potential offers. As for high-beta chipmakers, the group struggled with the PHLX Semiconductor Index losing 0.6%.

Similarly, another high-beta group—transport stocks—could not catch up to the broader market. The Dow Jones Transportation Average lost 1.2% with Norfolk Southern (NSC 103.18, -1.19) falling 1.1% after reporting in-line with its warning. However, airline stocks led the group lower amid rising fuel prices with Delta Air Lines (DAL 45.03, -1.17) sliding 2.5%.

Treasuries retreated throughout the day, but they trimmed their losses during afternoon action. The 10-yr note ended essentially where it traded just ahead of the FOMC Statement with the benchmark yield higher by four basis points at 2.05%.

Today's participation was ahead of recent averages with more than 845 million shares changing hands at the NYSE floor.

Economic data included advance Q1 GDP, Pending Home Sales, and MBA Mortgage Index:

According to the advance estimate, Q1 2015 GDP increased 0.2% after increasing 2.2% in Q4 2014 while the Briefing.com consensus expected an increase of 1.0% 

Even more disappointing, the downside miss on the top-line growth number masked an even worse overall trend. If not for an increase in inventories, GDP would have been negative in the first quarter. Real final sales declined 0.5% in the first quarter after increasing 2.3% in Q4 2014. That was the worst quarter since real final sales declined 1.0% in Q1 2014.

Personal consumption expenditures increased 1.9% in the first quarter, down from a 4.4% increase in Q4 2014

Goods spending increased a modest 0.2%, down from 4.8% in the fourth quarter

Services spending increased 2.8% after increasing 4.3% in the fourth quarter

Pending home sales for March rose 1.1% while the Briefing.com consensus expected an increase of 1.2%

The weekly MBA Mortgage Index fell 2.3% to follow last week's 2.3% increase

Tomorrow, weekly Initial Claims (Briefing.com consensus 290K), Personal Income/Spending data for March, and Q1 Employment Cost Index (consensus 0.6%) will be released at 8:30 ET while the Chicago PMI report for April (expected 50.0) will cross the wires at 9:45 ET.

Nasdaq Composite +6.1% YTD

Russell 2000 +3.5% YTD

S&P 500 +2.3% YTD

Dow Jones Industrial Average +1.2% YTD