Day Traders Diary

8/17/15

The stock market began the trading week on an upbeat, albeit quiet, note with the S&P 500 climbing 0.5%. The benchmark index turned an opening ten-point loss into an eleven-point gain while the Nasdaq Composite (+0.9%) displayed relative strength throughout the session.

Equity indices faced some short-lived weakness at the start of the session after the August Empire Manufacturing survey came in well below expectations (-14.9; Briefing.com consensus 5.0). The report was met with a rally in the Treasury market while equity futures slipped, leading to the lower open.

Despite the early pressure, the major averages were back in the green just 90 minutes after the opening bell and they continued inching higher during afternoon action. The health care sector (+1.0%) was among the early pockets of relative strength as biotechnology rallied throughout the day. The iShares Nasdaq Biotechnology ETF (IBB 371.67, +7.61) climbed 2.1%, contributing to the outperformance of the Nasdaq.

Unlike health care, the remaining countercyclical sectors could not keep pace with the market. The utilities sector (+0.5%) settled just behind while consumer staples (+0.1%) and telecom services (+0.4%) underperformed.

Over on the cyclical side, energy (-0.1%) and financials (+0.2%) underperformed while the remaining six groups ended in-line with or ahead of the broader market. The consumer discretionary sector (+1.0%) was a noteworthy area of strength thanks to sector-wide support. Retailers climbed with SPDR S&P Retail ETF (XRT 97.60, +0.70) rising 0.7% while homebuilders rallied across the board. The iShares Dow Jones US Home Construction ETF (ITB 29.17, +0.46) gained 1.6%, ending at levels last seen in August 2007.

Stock-specific news was limited today, but it is worth noting that Zulily (ZU 18.74, +6.17) spiked 49.1% after agreeing to be acquired by Liberty Interactive (QVCA 29.80, -0.46) for $18.75/share.

On the downside, the energy sector spent the entire trading day near its flat line as crude oil added to its recent losses, falling 1.5% to $41.87/bbl. Including today's decline, WTI crude is now down 11.9% since the end of July.

As mentioned earlier, today's trading volume was well below average with fewer than 700 million shares changing hands at the NYSE floor.

Economic data was limited to Empire Manufacturing and NAHB Housing Market Index:

The Empire Manufacturing Survey for August registered a reading of -14.9, which was below the prior month's reading of 3.9 and below the Briefing.com consensus estimate, which was pegged at 5.0 

New orders fell to -15.7 from -3.7 while shipments declined -13.8 from +8.2

The NAHB Housing Market Index for August rose to 61 from 60, which is what the Briefing.com consensus expected

Tomorrow, July Housing Starts (Briefing.com consensus 1.200 million) and Building Permits (consensus 1.257 million) will both be reported at 8:30 ET.

Nasdaq Composite +7.5% YTD

S&P 500 +2.1% YTD

Russell 2000 +1.7% YTD

Dow Jones Industrial Average -1.6% YTD