Day Traders Diary

8/5/15

The stock market snapped its three-day skid on Wednesday with the S&P 500 climbing 0.3%. The benchmark index settled behind the Nasdaq Composite (+0.7%), but ahead of the Dow Jones Industrial Average (-0.1%), which ended in the red.

Equity indices began the day with gains, but the early strength was just a mirage for the Dow Jones Industrial Average as the price-weighted index retreated from its opening high and spent the afternoon near its flat line. Most notably, shares of Disney (DIS 110.53, -11.16) pressured the index throughout the day after the company reported earnings. Disney delivered a three-cent beat, but that was overshadowed by a poor showing from its media and parks & resorts segments.

In addition to pressuring the Dow, Disney's results broadsided other media names, resulting in a 1.1% decline for the consumer discretionary sector even as retailers outperformed with SPDR S&P Retail ETF (XRT 98.99, +1.10) climbing 1.1%. Furthermore, Time Warner (TWX 79.80, -7.85) reported better than expected results, but the stock fell victim to industry-wide selling pressure, ending lower by 9.0%.

Discretionary sector notwithstanding, the energy space (-0.8%) finished in the red while seven of the remaining eight groups posted gains. As for energy, the growth-sensitive sector was among the early leaders, but slumped alongside crude oil, which settled lower by 1.4% at $45.11/bbl. Interestingly, the late-morning turn in oil coincided with the reversal in equities.

Despite the intraday reversal, the Nasdaq was able to end the day with more than half of its original gain thanks to the relative strength in the technology sector (+1.0%). The top-weighted group was underpinned by large cap names while Apple (AAPL 115.40, +0.76) erased an early loss to end higher by 0.7% after yesterday's drop widened its decline from mid-July highs to 13.8%. On the earnings front, Motorola Solutions (MSI 64.01, +3.79) spiked 6.3% after better than expected results overshadowed cautious guidance for Q3.

Moving to the countercyclical side, consumer staples (+0.9%) and health care (+0.7%) settled well ahead of the broader market while telecom services (unch) underperformed and utilities (+0.3%) ended in-line. For its part, the health care sector rallied alongside biotechnology with iShares Nasdaq Biotechnology ETF (IBB 386.72, +2.91) climbing 0.8%.

Treasuries notched their lows shortly after the opening bell on Wall Street, but they retraced about a third of their losses with the 10-yr yield rising four basis points to 2.27%.

Today's participation was ahead of recent averages with more than 890 million shares changing hands at the NYSE floor.

Economic data included ADP Employment, Trade Balance, ISM Services, and MBA Mortgage Index:

The ADP National Employment Report revealed that employment in the nonfarm private business sector rose by 185K in July while the Briefing.com consensus expected a reading of 220K 

The June reading was revised down to 229,000 from 237,000

The U.S. trade deficit widened to $43.80 billion in June from a downwardly revised $40.90 billion (from $41.90 billion) in May while the Briefing.com consensus expected a deficit of $42.70 billion 

The goods deficit increased to $63.50 billion in June from $60.60 billion in May while the services surplus was virtually unchanged at $16.70 billion

The ISM Non-manufacturing Index increased to 60.3 in July from 56.0 in June while the Briefing.com consensus expected an increase to 56.3 

That was the strongest reading since hitting 61.4 in August 2005

The weekly MBA Mortgage Index rose 4.7% to follow last week's uptick of 0.8%

Tomorrow, the Challenger Job Cuts report for July will be released at 7:30 ET while weekly Initial Claims will be reported at 8:30 ET (Briefing.com consensus 271,000).

Nasdaq Composite +8.5% YTD 

S&P 500 +2.0% YTD 

Russell 2000 +2.2% YTD 

Dow Jones Industrial Average -1.6% YTD