Day Traders Diary

5/15/15

The stock market ended the Friday session on a flat note and completed its second consecutive weekly round trip. The S&P 500 (+0.1%) settled just above its flat line, inching up to a new closing record high at 2,122.73 while the Nasdaq (-0.1%) lagged throughout the day. For the week, the S&P 500 added 0.3% after being down nearly 1.5% for the week on Wednesday.

Overall, the final session of the week was very quiet with the benchmark index trading inside a seven-point range. Stocks dipped in the early going after four disappointing economic reports weighed on sentiment, but that pessimism was essentially offset by increased expectations that the Federal Reserve will refrain from raising rates in the near term due to the recent string of uninspiring data. To that point, Treasuries rallied throughout the day, sending the 10-yr yield lower by ten basis points to 2.14% while strength in the long bond dropped its yield 12 basis points to 2.93%. Thanks to today's surge, the benchmark 10-yr note reclaimed the remainder of its loss from the early portion of the week.

Seven sectors registered gains with rate-sensitive utilities (+1.3%) holding the lead throughout the session. Meanwhile, influential groups like health care (+0.2%), consumer discretionary (+0.8%), and energy (+0.4%) also ended in the green, but their strength was offset by weakness in top-weighted technology (-0.3%) and financials (-0.4%) as well as the fifth largest group by weight—industrials (-0.1%).

The financial sector ended at the bottom of the leaderboard with regional banks leading the retreat that was fueled by the flattening at the long end of the yield curve.

For its part, technology underperformed after leading the market's rebound from Wednesday's low. Large cap components like Apple (AAPL 128.75, -0.20), Google (GOOGL 546.49, -2.71), IBM (IBM 173.26, -0.79), and Microsoft (MSFT 48.30, -0.42) lost between 0.2% and 0.9% with comparable weakness among their peers overshadowing a decent showing from the chipmaker group. Applied Materials (AMAT 20.20, +0.34) gained 1.7% after reporting a one-cent beat while the broader PHLX Semiconductor Index added 0.2%.

Similarly, the industrial sector was weighed down by some of its largest members like General Electric (GE 27.27, -0.14) and Boeing (BA 146.88, -1.08) while transport stocks rebounded after showing relative weakness earlier in the week. The Dow Jones Transportation Average gained 0.9% today, but still lost 1.1% for the week.

On the upside, the consumer discretionary sector enjoyed broad strength with retail stocks sending the SPDR S&P Retail ETF (XRT 98.64, +0.99) higher by 1.0%. Elsewhere, the energy sector (+0.4%) recovered from opening weakness as crude oil erased its overnight loss to end the week just below $60.00/bbl. The intraday recovery was assisted by a decline in the Dollar Index (-0.2%), which has surrendered 6.8% over the past five weeks.

Today's intraday participation was light, but that was masked by options expiration, which brought the final NYSE floor volume up to nearly 813 million shares by the close.

Economic data included Empire Manufacturing Index, Industrial Production/Capacity Utilization and Michigan Sentiment Index:

The Empire Manufacturing Survey for May improved to 3.1 from April's -1.2 while the Briefing.com consensus expected an increase to 4.5

Industrial production registered its fifth consecutive monthly decline, falling 0.3% in April after declining an upwardly revised 0.3% (from -0.6%) in March while the Briefing.com consensus expected an increase of 0.1% 

Manufacturing production was flat after increasing 0.3% in March, which was more-or-less in-line with the regional manufacturing surveys that showed minor contractions throughout the U.S.

Capacity utilization hit 78.2% while the Briefing.com consensus expected a reading of 78.4%

The University of Michigan Consumer Sentiment Index declined to 88.6 in the preliminary May reading from 95.9 in April while the Briefing.com consensus expected an increase to 96.0 

That was the lowest reading since October 2014 when the index hit 86.9

The Expectations Index fell to 81.5 in May from 88.8 in April while the Current Conditions Index declined to 99.8 from 107.0

The decline in sentiment was likely caused by increasing gasoline prices and some market volatility, which offset improvements in labor market conditions

Monday's data will be limited to the 10:00 ET release of the NAHB Housing Market Index for May (Briefing.com consensus 57).

Nasdaq Composite +6.2% YTD
Russell 2000 +3.2% YTD
S&P 500 +3.0% YTD
Dow Jones Industrial Average +2.5% YTD