Day Traders Diary

9/10/15

The stock market ended the Thursday session on a higher note after enduring a shaky start to the trading day. The S&P 500 added 0.5%, extending this week's gain to 1.6% while the Nasdaq Composite (+0.8%) outperformed and will enter the Friday session up 2.4% for the week.

Equity indices opened near their flat lines after the futures market was whipped around during pre-market action. The early-morning volatility followed a defensive session in Asia while European markets also struggled. Once the U.S. session got going, the market traded in sideways fashion through the first hour before climbing higher. However, the S&P 500 found resistance near the 1,965 level in the early afternoon, slipping into the close.

Heavily-weighted technology (+1.0%) and health care sectors (+0.9%) displayed strength from the start, and that dynamic kept the S&P 500 from sliding too far below its flat line during the opening hour. The top-weighted tech sector rallied behind Apple (AAPL 112.57, +2.42), which spiked 2.2%, while other large cap components posted slimmer gains. It is worth noting that high-beta chipmakers traded broadly higher in the morning, but the PHLX Semiconductor Index narrowed its gain to 0.4% by the close. That being said, the SOX Index remains on track to end the week higher by 3.0% versus a 2.5% week-to-date gain for the tech sector.

For its part, the health care sector received support from biotechnology, which also contributed to the relative strength in the Nasdaq Composite. The iShares Nasdaq Biotechnology ETF (IBB 350.72, +6.50) spiked 1.9%, extending this week's gain to 4.0%.

The two influential sectors remained ahead of the broader market even as the S&P 500 slid from its high during afternoon action. Similarly, energy (+0.5%) and financials (+0.5%) settled with gains while the remaining sectors struggled to keep pace with the market.

It is worth noting that the industrial sector added just 0.1%, masking a 0.9% jump in the Dow Jones Transportation Average, which pushed its weekly gain to 3.0%. Con-way (CNW 47.55, +12.02) was the big story in the bellwether complex as the stock surged 33.8% after agreeing to be acquired by XPO Logistics (XPO 30.24, -3.75) for $47.60/share or $3 billion.

Elsewhere, Treasuries ended the day just above their lows with the 10-yr yield up three basis points at 2.23%. Meanwhile, the Dollar Index (95.44, -0.57) retreated 0.6%, giving up 0.7% to the euro, which climbed to 1.1292 against the greenback.

Economic data included Initial Claims, Import/Export Prices, and Wholesale Inventories:

The initial claims level declined to 275,000 for the week ending September 5 from a downwardly revised 281,000 (from 282,000) while the Briefing.com consensus expected a drop to 275,000

After a brief slip to multi-decade lows in July, the claims level has stabilized around 275,000, which is a level that supports the idea that the labor market is encroaching on full employment

Export prices, excluding agriculture, decreased 1.3% in August after decreasing 0.4% in the prior reading

Excluding oil, import prices decreased 0.4%, which followed last month's decrease of 0.3%

Wholesale inventories declined 0.1% in July after increasing a downwardly revised 0.7% (from 0.9%) in June while the Briefing.com consensus expected an increase of 0.3%

That was the first contraction since a 0.7% decline took place in May 2013, likely resulting from pricing changes and not changes in inventory management. A sharp drop in petroleum prices in July led to a 4.8% decline in wholesale petroleum inventories, but excluding petroleum, wholesale inventories were flat

Tomorrow, August PPI (Briefing.com consensus -0.1%) will be reported at 8:30 ET while the preliminary reading of the Michigan Sentiment survey (consensus 91.5) will be released at 10:00 ET. The day's data will be topped off with the 14:00 ET release of the Treasury Budget for August.

Nasdaq Composite +1.3% YTD

Russell 2000 -4.1% YTD

S&P 500 -5.2% YTD

Dow Jones Industrial Average -8.4% YTD