Day Traders Diary

10/1/15

The stock market ended Thursday on a modestly higher note after climbing off its intraday low. The S&P 500 (+0.20%) settled within four points of its unchanged level while the Dow (-0.08%) and Nasdaq (+0.15%) underperformed.

Equities began the first session of Q4 just above their flat lines after a pre-market retreat caused S&P 500 futures to surrender a 25-point gain. The early morning slide from pre-market highs gathered steam following a Bloomberg report indicating the Bank of Japan does not plan to introduce additional stimulus at this time.

In addition to pressuring stocks, the report gave a boost to the yen, sending the dollar/yen pair to a session low near 119.50; however, the currency pair was able to claw its way back into the 120.00 range in the afternoon while stocks also climbed off their lows.

Five sectors ended the day in the green with the health care sector (+0.9%) finishing among the leaders. Biotechnology, meanwhile, struggled to keep pace with the broader sector, but a late rally in the iShares Nasdaq Biotechnology ETF (IBB 305.60, +2.27) helped the ETF end higher by 0.8% after being down as much as 2.1% at its lowest point.

The early underperformance in biotechnology kept the Nasdaq behind the broader market into the afternoon while the technology sector also struggled. To be fair, the tech sector trimmed its loss to 0.1% during the afternoon, while high-beta chipmakers could not follow suit, sending the PHLX Semiconductor Index lower by 1.2%. As for top-weighted tech names, Apple (AAPL 109.58, -0.72) lost 0.7% while Google (GOOGL 642.00, +3.63) added 0.6%.

Elsewhere among cyclical groups, the materials sector (+1.1%) held the lead throughout the session while the consumer discretionary space (+0.7%) rallied behind automakers and homebuilders. Ford (F 13.67, +0.10) and General Motors (GM 30.67, +0.65) posted respective gains of 0.7% and 2.2% after reporting solid September sales while the iShares Dow Jones US Home Construction ETF (ITB 26.45, +0.35) climbed 1.3%.

Also of note, the energy sector (+0.1%) settled just behind the broader market after being up more than 2.0% at the start. That early strength was brought on by a sharp morning spike in crude oil, but the energy component surrendered its entire gain, ending lower by 0.9% at $44.75/bbl after briefly crossing above $47.00/bbl. The intraday turnaround developed shortly after it was reported the Senate Banking Committee approved a bill to roll back the ban on crude oil exports.

Treasuries registered slim gains after spending the day near their flat lines with the 10-yr yield ticking down one basis point to 2.04%.

Today's participation was ahead of recent averages with more than 950 million shares changing hands at the NYSE floor.

Economic data included Initial Claims, Construction Spending, and ISM Index:

Weekly initial claims increased to 277,000 from an unrevised 267,000 while the Briefing.com consensus expected an increase to 270,000

Despite the larger-than-expected increase, the four-week moving average declined to 271,000 from 272,000, which is a level consistent with an employment sector nearing full employment

The continuing claims level declined to 2.191 million from an upwardly revised 2.244 million (from 2.242 million), representing the lowest reading since November 2000

The ISM Manufacturing Index declined to 50.2 in September from 51.1 while the Briefing.com consensus expected a decline to 50.6

If there is one bit of solace in the data, it is that manufacturing conditions -- nationally -- managed to stay in an expansion mode, albeit barely. The same could not be said for the regional data from the Federal Reserve manufacturing surveys, which showed sharp contractions in every area of the country.

With the exception of Customer Inventories -- which are reportedly too high -- all of the sub-indices either declined or were unchanged in September. That included a notable drop in both the Production (51.8 from 53.6) and New Orders (50.1 from 51.7).

Construction spending increased 0.7% in August after increasing a downwardly revised 0.4% (from 0.7%) while the Briefing.com consensus expected an increase of 0.5%

Private construction spending increased 0.7% in August, down from a 1.1% increase in July

Most of the August private construction gain came from the residential sector as residential construction spending rose a solid 1.3% in August after increasing 0.6% in July

Tomorrow, the September Nonfarm Payrolls report will be released at 8:30 ET (Briefing.com consensus 205,000) while August Factory Orders (consensus -1.0%) will be reported at 10:00 ET.

Nasdaq Composite -2.3% YTD

S&P 500 -6.6% YTD

Dow Jones Industrial Average -8.7% YTD

Russell 2000 -8.9% YTD