Day Traders Diary

8/19/15

The stock market ended the Wednesday session on a lower note after enduring a volatile day that included opening weakness, an afternoon rebound, and a slide from rebound highs. When the dust settled, the S&P 500 ended lower by 0.8%, turning a slim weekly gain into a 0.6% week-to-date loss.

Equities stumbled at the start after the overnight session featured more uninspiring action in China. Specifically, the Shanghai Composite climbed 1.2%, but not before being down more than 5.0% in the early going. The wild turnaround was followed by a retreat across European markets while U.S. equities opened in the red and continued their slide with the energy sector (-2.8%) pacing the move.

The growth-sensitive group extended its weekly loss to 3.2% while crude oil fell to a new low for the year, ending the pit session lower by 4.3% at $40.80/bbl. Similarly, the other commodity-related sector—materials (-1.2%)—ended at the bottom of the leaderboard amid weakness in steelmakers. The Market Vectors Steel ETF (SLX 25.63, -0.75) lost 2.8%. That being said, mining shares represented a pocket of strength, evidenced by a 2.9% spike in Market Vectors Gold Miners ETF (GDX 15.20, +0.43). On a related note, gold futures climbed 1.2% to $1130.70/ozt.

The early selling pressured the S&P 500 below its 200-day moving average (2,078), but the benchmark index crawled back above that mark during afternoon action and charged to an intraday high after the minutes from the July FOMC meeting crossed the wires about 20 minutes ahead of the scheduled release time.

Overall, the minutes appeared to be quite dovish with members "generally agreeing" that more information is needed before hiking rates. Furthermore, most members believed that "conditions for policy firming had not yet been achieved," but they agreed that conditions were nearing that point.

The minutes were followed by a spike in the Treasury market, sending the 10-yr note to its high (10-yr yield -8 bps to 2.12%) while the Dollar Index (96.37, -0.67) fell 0.7%.

Interestingly, the afternoon rebound dissolved just as fast as it had crystalized with the S&P 500 returning to its pre-FOMC levels roughly 45 minutes after hitting its rebound high.

Eight sectors ended the day in negative territory while rate-sensitive telecom services (+0.01%) and utilities (+0.4%) eked out gains thanks to lower yields.

Meanwhile on the cyclical side, the aforementioned energy and materials struggled throughout the day while other growth-sensitive groups fared a bit better. Technology (-0.9%) and financials (-0.9%) ended essentially in-line with the broader market while the consumer discretionary sector (-0.2%) spent the day ahead of the benchmark index. Select restaurant names displayed gains with Yum! Brands (YUM 86.08, +1.88) spiking 2.2% after naming a new CEO for its division in China. Also of note, Lowe's (LOW 74.37, +1.35) climbed 1.9% despite missing bottom-line estimates and reaffirming its guidance.

Today's participation was ahead of recent averages with more than 810 million shares changing hands at the NYSE floor.

Economic data was limited to CPI and the MBA Mortgage Index:

Total CPI rose 0.1% (Briefing.com consensus +0.2%) in July while Core CPI, which excludes food and energy, also rose 0.1% (Briefing.com consensus +0.2%)

The indexes for food (+0.2%) and energy (+0.1%) helped push up the all items index while a 0.4% increase in the shelter index was the key driver behind the increase in the all items index, excluding food and energy

On a year-over-year basis, total CPI is up 0.2% and core CPI is up 1.8%

The weekly MBA Mortgage Index rose 3.6% to follow last week's 0.1% uptick

Tomorrow, weekly Initial Claims (Briefing.com consensus 272,000) will be reported at 8:30 ET while July Existing Home Sales (consensus 5.42 million), July Leading Indicators (expected 0.2%), and the Philadelphia Fed survey for August (consensus 0.2%) will all be released at 10:00 ET.

Nasdaq Composite +6.0% YTD

S&P 500 +1.0% YTD

Russell 2000 -0.3% YTD

Dow Jones Industrial Average -2.7% YTD