Day Traders Diary

9/17/15

 The major averages hold modest midday gains with the Nasdaq Composite (+0.4%) trading ahead of the S&P 500 (+0.2%).

Broadly speaking, the first half of the trading day has been quiet ahead of a volatility storm that is expected to be unleashed by the release of the FOMC policy directive at 14:00 ET. That policy statement could call for the first fed funds rate hike in more than nine years, but the fed funds futures market implies only a 30% chance of a that hike taking place today. Similarly, economist polled by Briefing.com expect the Fed to maintain the target rate at 0.25%.

With participants awaiting the afternoon announcement, trading volume has dropped off a bit after the opening total compared favorably to yesterday's opening tally. Earnings news has contributed to the increased activity after the open with Oracle (ORCL 37.06, -1.21) down 3.2% after its one-cent beat was not enough to dispel concerns about the company's guidance and lack of revenue growth. Shares of Oracle have contributed to the relative weakness in the technology sector (-0.5%) while eight of the remaining nine groups trade with gains.

On the upside, the utilities sector (+0.6%) holds the lead while health care (+0.5%), consumer discretionary (+0.5%), and energy (+0.3%) follow not far behind. Notably, the health care sector has been boosted by biotechnology, which has also contributed to the relative strength in the Nasdaq. The iShares Nasdaq Biotechnology ETF (IBB 359.24, +4.10) trades higher by 1.2%, erasing its decline from yesterday.

Elsewhere, the discretionary sector has received support from media names with Cablevision (CVC 32.85, +4.31) surging 15.1% after agreeing to be acquired by Altice for roughly $17.70 billion in cash.

Similar to the stock market, the bond market has traded inside a narrow range with the 10-yr yield currently down one basis point at 2.29%.

Economic data included Initial Claims, Housing Starts, Current Account, and the Philadelphia Fed Survey:

The initial claims level declined to 264,000 from an unrevised 275,000 while the Briefing.com consensus expected no change at 275,000

Over the past four weeks, the initial claims level has averaged 272,500, and weekly volatility has been minimal, suggesting a strong labor market

The continuing claims level decreased to 2.237 mln from an upwardly revised 2.263 mln (from 2.260 mln) while the consensus expected a drop to 2.255 mln

Housing starts declined 3.0% in August to 1.126 mln from a downwardly revised 1.161 mln (from 1.206 mln) in July while the Briefing.com consensus a drop to 1.158 mln

As expected, single-family starts pulled back in August after reaching a seven-year high in July while construction levels remained strong

Single-family starts slipped only 3.0% to 739,000 in August from 762,000 in July, and new construction is running well above its three-month (729,333) and 12-month (692,417) averages

The current account deficit for the second quarter totaled $109.70 billion while the Briefing.com consensus expected the deficit to hit $112.20 billion

The first quarter deficit was revised to $118.30 billion from $113.30 billion

The Philadelphia Fed's Business Outlook Survey declined to -6.0 in September from 8.3 in August while the Briefing.com consensus expected an increase to 6.5

That was the first reported contraction in the Philadelphia region since February 2014

The Philadelphia region is not the only region where manufacturing activities experienced a sudden downturn. Just about all of the August regional Federal Reserve manufacturing surveys were negative, and the latest September reading of the New York Fed's Empire Manufacturing Survey reported a second consecutive sizable contraction in manufacturing activities