Day Traders Diary

8/14/15

The stock market ended a volatile week on a modestly higher note with the S&P 500 adding 0.4%. The benchmark index extended its weekly gain to 0.7% while the Nasdaq Composite (+0.3%) underperformed, ending the week higher by 0.1%.

The first four trading days of the week were jam-packed with macroeconomic events, but the Friday affair was very quiet with fewer than 700 million shares changing hands at the NYSE floor.

Equity indices began the final session of the week near their flat lines and spent the first two hours of action alternating between gains and losses. However, heavily-weighted sectors like financials (+0.7%) and industrials (+0.6%) displayed relative strength from the early going while the top-weighted technology sector (+0.5%) contributed to the afternoon strength.

The financial sector continued its rebound off Wednesday's low with today's move lifting the influential sector to a weekly gain of 0.3%. Meanwhile, industrials received support from transport stocks, evidenced by a 0.7% increase in the Dow Jones Transportation Average. The bellwether complex gained 0.8% for the week with 19 of 20 components contributing to today's advance. Freight carrier Con-way (CNW 37.45, +0.71) was the top performer, climbing 1.9% while shipper Matson (MATX 40.79, -0.05) shed 0.1%.

Elsewhere, the technology sector overcame relative weakness among high-beta chipmakers with large cap components like Apple (AAPL 116.00, +0.85), Google (GOOGL 689.37, +2.86), and Microsoft (MSFT 47.00, +0.27) gaining between 0.4% and 0.7% while the PHLX Semiconductor Index lost 0.6% and contributed to the underperformance in the Nasdaq.

Similarly, biotechnology names also weighed on the Nasdaq, but iShares Nasdaq Biotechnology ETF (IBB 364.06, -2.33) was able to narrow its loss to 0.6% by the close. The ETF surrendered 1.3% for the week while the health care sector added 0.3% today, ending the week flat.

On the downside, the energy sector (-0.2%) was among the early leaders, but retreated as crude oil slid from its morning high. The energy component added 0.5% and settled at $42.47/bbl, but still lost 3.6% for the week. Meanwhile, the energy sector climbed 3.2% during the week, ending ahead of the remaining nine groups.

Treasuries registered slim losses after slipping in reaction to a July PPI report that came in just ahead of expectations. The 10-yr note ended just below its flat line with the benchmark yield adding one basis point to 2.20%.

Also of note, today's eurogroup meeting with Greek representatives produced an agreement, which puts Greece on track to receive EUR13 billion in bailout funds next week.

Economic data included PPI, Industrial Production, and the Michigan Sentiment Index:

Producer prices increased 0.2% in July after increasing 0.4% in June while the Briefing.com consensus expected an increase of 0.1% 

Energy prices, which provided the bulk of the gain in June, fell 0.6% in July. Gasoline prices increased 1.5%, but that was offset by big declines in the prices of home heating oil (-9.5%), liquefied petroleum (-4.3%), diesel fuel (-2.6%), and residential natural gas (-2.4%)

Food prices fell 0.1% in July after increasing 0.6% in June

Excluding food and energy, core prices increased 0.3% for a second consecutive month in July while the consensus expected an increase of 0.1% 

The entire increase in core prices resulted from a 0.4% increase in services prices

Industrial production increased 0.6% in July after increasing a downwardly revised 0.1% (from 0.2%) in June while the Briefing.com consensus expected an increase of 0.3% 

That was the largest increase since a 0.9% increase in November 2014

Manufacturing production increased 0.8% in July after declining 0.3% in June

Nearly the entire increase in industrial production resulted from historic gains in the auto industry. Excluding autos, total industrial production was flat in July and manufacturing production increased only 0.1%

The University of Michigan Consumer Sentiment Index declined to 92.9 in the preliminary August reading from 93.1 in July while the Briefing.com consensus expected an increase to 93.7 

Concerns over a downward trending stock market were offset by improvements in labor market conditions, as shown by the historic lows in the initial claims level, and lower gasoline prices

Both the Current Conditions (107.1 from 107.2) and Expectations (83.8 from 84.1) Indices were virtually unchanged in August

On Monday, the Empire Manufacturing Index for August will be released at 8:30 ET while the August NAHB Housing Market Index will be reported at 10:00 ET.

Nasdaq Composite +6.6% YTD

S&P 500 +1.6% YTD

Russell 2000 +0.6% YTD

Dow Jones Industrial Average -1.9% YTD

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