Day Traders Diary

9/30/15

The stock market ended the midweek session on a higher note, but could not avoid its second consecutive monthly decline. The S&P 500 gained 1.9% on Wednesday, but surrendered 2.7% in September. The tech-heavy Nasdaq Composite (+2.3%) outperformed today, but lost 3.3% for the month.

The Wednesday session also marked the end of the third quarter, during which the S&P 500 fell 6.9% versus a 7.4% decline in the Nasdaq. The end of Q3 meant that quarter-end positioning and portfolio rebalancing likely played a part in today's advance.

Equity indices began the trading day with solid gains after index futures rallied alongside markets in Europe. The S&P 500 built on its opening spike, notching a session high just before 10:30 ET; however, that move was followed by a pullback into the middle of today's trading range, which occurred alongside rally in the yen that briefly dropped the dollar/yen pair below the 120.00 level.

The short-lived swoon in the dollar/yen pair was followed by a rebound into the 120.00 area while stocks climbed to new highs.

All ten sectors finished the day with gains, paced by a 2.7% spike in the consumer discretionary space. The cyclical sector held the lead throughout the session while four of the remaining nine groups added 2.0% or more. Notably, the health care sector (+2.1%) spent the day among the leaders with biotechnology underpinning the strength. The iShares Nasdaq Biotechnology ETF (IBB 303.33, +13.85) surged 4.8%, narrowing its September loss to 11.3%. For its part, the health care sector lost 5.8% in September.

Today's relative strength in biotechnology helped the Nasdaq spend the day ahead of the broader market. To be fair, the index received another helping hand from large cap tech names with the likes of Google (GOOGL 637.20, +14.59), Microsoft (MSFT 44.20, +0.76), and Facebook (FB 89.73, +3.06) gaining between 1.8% and 3.5%. Chipmakers also showed considerable strength with the PHLX Semiconductor Index surging 3.8% after EZchip (EZCH 25.16, +3.17) agreed to be acquired by Mellanox (MLNX 37.79, -2.00) for $25.50/share.

In other sector news, Western Digital (WDC 79.40, +10.53) surged 15.3% after Unisplendour made a $3.78 billion investment in WDC by acquiring newly issued shares at $92.50/share.

On the earnings front, Barracuda Networks (CUDA 15.58, -7.97) plunged 33.8% after cautious guidance overshadowed a one-cent beat.

Treasuries slumped overnight, but they began rallying around 7:00 ET with the move continuing into the afternoon. As a result, the 10-yr note reclaimed its overnight loss with the benchmark yield ending flat at 2.05%.

Today's participation was well above average as more than a billion shares changed hands at the NYSE floor.

Economic data reported today included ADP Employment, Chicago PMI, and MBA Mortgage Index:

The ADP National Employment Report revealed that employment in the nonfarm private business sector rose by 200K in September, which was in line with the Briefing.com consensus

The August reading was revised down to 186,000 from 190,000

The weekly MBA Mortgage Index fell 6.7% to follow last week's 13.9% spike

The Chicago PMI dropped to 48.7 in September from 54.4 in August while the Briefing.com Consensus expected a decline to 52.9

The reading highlights this year's volatility in the survey as monthly contractions (five times) have occurred more regularly than expansions (four times) so far in 2015

The Production Index dropped to 43.6 from 59.0 in August, representing the lowest reading since July 2009 and the biggest one-month decline since February

Tomorrow, weekly Initial Claims (Briefing.com consensus 270K) will be released at 8:30 ET while August Construction Spending (consensus 0.5%) and September ISM Index (consensus 50.6) will both be reported at 10:00 ET.

Nasdaq Composite -2.5% YTD

S&P 500 -6.8% YTD

Dow Jones Industrial Average -8.6% YTD

Russell 2000 -8.6% YTD