Day Traders Diary

7/16/15

The major averages sport midday gains with the Nasdaq Composite (+1.0%) trading well ahead of the Dow Jones Industrial Average (+0.2%) as blue chip names struggle to keep pace with biotechnology and technology.

Today's advance began in the futures market last night with better than expected earnings from Intel (INTC 29.52, -0.17) and Netflix (NFLX 114.05, +15.92) providing a boost shortly after Wednesday's close. Nasdaq futures led the way last night and the cash index remains in the lead today even though Intel has slipped into the red.

In addition to yesterday's earnings, futures got a boost after the Greek parliament voted 229-64-6 in favor of austerity measures that will allow bailout negotiations to continue with the country expected to receive EUR86 billion in rescue funds. Furthermore, the European Central Bank, which held a policy meeting today, raised the country's allowance to Emergency Liquidity Assistance by EUR900 million, which will pave the way for Greek banks to open as soon as Monday.

Investors received more earnings this morning with roughly half of the reports coming in ahead of estimates. Citigroup (C 58.52, +2.06) has jumped 3.7%, but some of that strength has been offset by a 1.2% decline in Goldman Sachs (GS 210.18, -2.78) even though both reported better than expected results. As a result, the financial sector (+0.8%) is among today's leaders but Goldman has pressured the price-weighted Dow.

Similar to Goldman Sachs, Dow component UnitedHealth (UNH 124.25, -1.61) reported better than expected results, but has yet to make it into the green. To be fair, the stock has narrowed its loss to 1.3% after being down as much as 3.1% earlier following yesterday's record close. UnitedHealth has pressured the health care sector (+0.4%), but the group has also had to contend with losses among hospital stocks. Community Health (CYH 60.99, -1.42) and Universal Health (UHS 140.53, -1.90) hold respective losses of 2.3% and 1.3% after both names were downgraded to 'Sector Weight' from 'Overweight' at Keybanc Capital Markets. Biotechnology, however, has done some heavy lifting with iShares Nasdaq Biotechnology ETF (IBB 395.69, +4.93) trading higher by 1.3%.

Elsewhere, Treasuries retreated overnight, but a recent recovery has the benchmark 10-yr yield unchanged for the day (2.35%).

Economic data included Initial Claims, NAHB Housing Market Index, and Philadelphia Fed Survey:

The initial claims level declined to 281,000 for the week ending July 11 from a downwardly revised 296,000 (from 297,000) while the Briefing.com consensus expected a decline to 283,000 

The four-week moving average increased to 282,500 from 279,250, which is the first time that the four-week moving has surpassed 280,000 since the end of April

The continuing claims level decreased to 2.215 mln for the week ending July 4 from a downwardly revised 2.327 mln (from 2.334 mln) while the consensus expected a decrease to 2.285 mln

The NAHB Housing Market Index for July rose to 60 from 59 while the Briefing.com consensus expected the index to hold at 59

The Philadelphia Fed's Business Outlook Survey declined to 5.7 in July from 15.2 in June while the Briefing.com consensus expected a drop to 12.5 

There was a general softening in manufacturing conditions across all areas with four out of the nine survey subcomponents contracting in July

The Shipments Index declined to 4.4 in July from 14.3 while Employment conditions were notably weak 

The Number of Employees Index turned negative, falling from 3.8 in June to -0.4 in July

The Average Employee Workweek Index dropped to 4.0 from 4.7