Day Traders Diary

9/1/15

The major averages trade broadly lower at midday with the Dow Jones Industrial Average (-2.5%) and S&P 500 (-2.6%) trailing the Nasdaq Composite (-2.3%).

Equity indices slumped out of the gate after index futures retreated throughout the night. The futures market began seeing weakness shortly after yesterday's cash close with disappointing manufacturing data from China contributing to the cautious posture. Specifically, the official Manufacturing PMI slipped to 49.7 from 50.0 while the Caixin Manufacturing PMI ticked up to 47.3 from 47.2, but both readings came in below 50.0, which signifies contraction.

The cautious posture displayed during Asian trade carried over to Europe where major regional indices ended with losses between 2.4% and 3.0%.

Once the U.S. market opened, the key indices slumped, and they have languished near their early lows since then. Dip-buyers have been unwilling to step into the fold so far today as the second-largest sector—financials (-3.2%)—trades at the bottom of the leaderboard.

Elsewhere among influential sectors, technology (-2.5%) has kept pace with the broader market while health care (-2.2%) trades a bit ahead after surrendering 8.1% in August. Also of note, the energy sector (-3.2%) is among the weakest performers as crude oil pulls back after spiking nearly 30.0% in three days. Currently, WTI crude trades down 6.7% at $45.91/bbl, returning into the bottom half of yesterday's trading range.

Once again, with the market enduring another large swing, stock-specific news has been of second mind. Investors received just a handful of quarterly earnings this morning with Dollar Tree (DLTR 70.72, -5.54) trading lower by 7.3% after missing estimates and guiding lower.

Treasuries have held gains since the early going, but they have backed away from their highs, leaving the 10-yr yield lower by four basis points at 2.18%.

Economic data was limited to Construction Spending and ISM:

Construction spending increased 0.7% in July after increasing an upwardly revised 0.7% (from 0.1%) in June while the Briefing.com consensus expected an increase of 0.5%

Private residential construction increased 1.1% in July, up from a 0.9% increase in June

Private nonresidential construction spending rebounded in July, rising 1.5% after declining 0.7% in June.

Big reversals were recorded in the manufacturing (4.7% from -0.5%) and power (2.1% from -0.7%) sectors while spending on lodging (-1.1%) and commercial (-1.0%) buildings declined

The ISM Manufacturing Index declined to 51.1 in August from 52.7 in July while the Briefing.com consensus expected a decline to 52.6

The August decline came during a period where multiple regional Federal Reserve manufacturing surveys showed sizable contractions in manufacturing activities