Day Traders Diary

8/3/15

The stock market began August on a defensive note with a retreat that sent the S&P 500 below its 50-day (2,099) moving average. The benchmark index was down as much as 0.8%, but narrowed its loss to 0.3% by the close, ending ahead of the Dow Jones Industrial Average (-0.5%).

Equities hovered near their flat lines during morning action after the overnight session saw more selling in China. To that point, the Shanghai Composite lost 1.1% after the official Manufacturing PMI hit a five-month low (50.0; expected 50.2) while the Non-Manufacturing PMI improved to 53.9 from 53.8, representing a five-month high.

Meanwhile, eurozone economies reported Manufacturing PMI readings that were mostly better than expected while economic data from the U.S. contributed to the weakness in the stock market as Construction Spending (+0.1%; Briefing.com consensus 0.6%) and the ISM Manufacturing Index (52.7; consensus 53.7) missed expectations.

Treasuries spiked after the release of today's economic data, which sent the 10-yr yield lower by four basis points to 2.15%, representing the lowest level since the start of June. That decline in yields was a supportive factor for the utilities sector, which gained 0.6%. Similar to utilities, consumer staples (+0.3%) and telecom services (+0.2%) posted gains while the health care sector (unch) settled just above its flat line.

As for cyclical sectors, financials (unch) ended ahead of the broader market while the remaining five growth-sensitive groups finished among the laggards. The energy sector (-2.0%) spent the entire session at the bottom of the leaderboard as crude oil fell 3.9% to $45.25/bbl.

Elsewhere, the top-weighted technology space (-0.5%) was pressured by large cap names with the likes of Apple (AAPL 118.44, -2.86), IBM (IBM 158.71, -3.28), and Hewlett-Packard (HPQ 30.02, -0.50) falling between 1.6% and 2.4%. High-beta chipmakers stayed ahead of the sector, but the PHLX Semiconductor Index still lost 0.3%.

Similar to technology, the industrial sector (-0.4%) struggled as losses among large cap names like Boeing (BA 143.69, -0.48), Caterpillar (CAT 77.26, -1.37), and General Electric (GE 25.87, -0.23) overshadowed relative strength in transport stocks. The Dow Jones Transportation Average added 0.3% with all five airline components posting gains thanks to lower fuel prices.

Today's participation was in-line with recent averages as 800 million shares changed hands at the NYSE floor.

Economic data included Personal Income/Spending data, ISM Index, and Construction Spending:

Personal income increased 0.4% for a second consecutive month in June after revisions reduced the originally reported May (0.5%) growth rate 

The Briefing.com consensus expected an increase of 0.3%

Personal spending increased 0.2% in June after a downwardly revised 0.7% (from 0.9%) increase in May while the consensus expected an increase of 0.2%

Wages and salaries increased 0.2% in June following a 0.4% increase in May. That gain was in-line with the May employment data, which showed a 0.2% increase in aggregate earnings

The ISM Manufacturing Index fell to 52.7 in July from 53.5 in June while the Briefing.com consensus expected the index an increase to 53.7 

The July drop occurred despite improvements in most of the regional Federal Reserve manufacturing surveys

Production growth remained strong, as the related index increased to 56.0 in July from 54.0 in June

Construction spending increased 0.1% in June after an upwardly revised 1.8% (from 0.8%) gain in May while the Briefing.com consensus expected an increase of 0.6% 

Private construction spending declined 0.5% in June after increasing 1.7% in May

Residential construction spending held up reasonably well in June, increasing 0.4% after increasing 0.9% in May

Spending on nonresidential construction projects fell 1.3% in June after increasing 2.5% in May. Considering the strong growth reported in April (+4.9%) and March (+3.3%), the pullback in June was not particularly concerning

Tomorrow's economic data will be limited to the Factory Orders report for June, which will be released at 10:00 ET (Briefing.com consensus 1.8%).

Nasdaq Composite +8.0% YTD

S&P 500 +1.9% YTD

Russell 2000 +2.3% YTD

Dow Jones Industrial Average -1.3% YTD