Day Traders Diary

8/13/15

The major averages hold modest midday gains with the Nasdaq Composite (+0.4%) trading just ahead of the Dow Jones Industrial Average (+0.3%) and S&P 500 (+0.3%).

The first half of today's session has been relatively quiet after Asian markets rebounded across the board during overnight action. The People's Bank of China attempted to calm some of the recent jitters by holding a press conference during which bank officials said the yuan adjustment "is almost complete" and that rumors of a 10.0% devaluation were false.

Equity indices began the trading day near their flat lines, but spent the first hour in negative territory as relative weakness in the energy sector (-0.9%) kept the market under pressure. The growth-sensitive group has retreated alongside crude oil, which has plunged 2.5% to $42.25/bbl. Meanwhile, the remaining cyclical sectors traded closer to their flat lines through morning action, but picked up steam as the market climbed out of the red.

That morning recovery was fueled by the four top-weighted sectors and the influential bunch remains in the lead. Most notably, the consumer discretionary sector has spiked 1.0% while technology (+0.3%), financials (+0.4%), and health care (+0.3%) hold slimmer gains.

For its part, the discretionary sector has received broad support with the strength likely aided by a better than expected retail sales report for July. The SPDR S&P Retail ETF (XRT 96.72, +0.37) has climbed 0.4% while homebuilders also outperform with iShares Dow Jones US Home Construction ETF (ITB 28.75, +0.52) trading higher by 1.8%. On the earnings front, News Corp (NWSA 14.95, +0.83) has surged 5.9% after reporting a two-cent beat on light revenue.

Elsewhere, the financial sector has rebounded from yesterday's underperformance, but the economically-sensitive group remains down 0.4% for the week while the remaining nine sectors hold week-to-date gains between 0.2% (consumer staples) and 3.8% (energy).

Treasuries have spent the entire day in the red and they remain near their lows with the 10-yr yield higher by five basis points at 2.18%.

Economic data included Initial Claims, Retail Sales, Import/Export Prices, and Business Inventories:

Weekly initial claims increased to 274,000 from a downwardly revised 269,000 (from 270,000) while the Briefing.com consensus expected an increase to 271,000 

The four-week moving average fell to 266,250 from 268,000, representing the lowest level since April 2000, when it also reached 266,250

Continuing claims increased to 2.273 million from an upwardly revised 2.258 million (from 2.255 million) while the consensus expected a decline to 2.247 million

Retail sales increased 0.6% in July while the Briefing.com consensus expected an increase of 0.5% 

An upward revision lifted June sales to the flat line from -0.3%

Motor vehicle demand played a large part in the increase in sales growth as motor vehicle manufacturers reported unit sales increased to 17.6 million SAAR in July from 17.0 million SAAR in June. That gain pushed up sales at motor vehicle and parts dealers by 1.4% after declining 1.5% in May

Excluding autos, retail sales increased 0.4% in July after increasing an upwardly revised 0.4% (from -0.1%) in June

Export prices, excluding agriculture, decreased 0.4% in July after decreasing 0.1% in the prior reading 

Excluding oil, import prices decreased 0.3%, which followed last month's decrease of 0.2%

Business inventories increased 0.8% in June after an unrevised 0.3% gain in May while the Briefing.com consensus expected an increase of 0.3% 

The inventory changes from manufacturers (0.6%) and merchant wholesalers (0.9%) were known prior to the release. The only new information was that retailer inventories increased 0.9% in June after a 0.2% gain in May 

Retailer inventory growth was strong across the board as all sectors reported growth above 0.5%, with the largest gains coming from motor vehicles (1.4%), building materials (1.0%), and furniture (0.9%)