Day Traders Diary

10/27/15

The stock market endured its second consecutive retreat on Tuesday, but the overall trading dynamic was very similar to the range-bound affair from Monday. The S&P 500 lost 0.3% while the Nasdaq Composite (-0.1%) outperformed throughout the session.

In some ways, the cautious posture was not all that shocking considering tomorrow afternoon will feature the release of the October FOMC policy directive, which will cross the wires at 14:00 ET.

As for today, nine sectors ended the day in negative territory with cyclical groups showing relative weakness across the board. The energy sector (-1.2%) spent its second consecutive day behind the remaining nine groups as lower oil prices weighed. To that point, WTI crude fell 1.8% to $43.22/bbl.

Similar to energy, the industrial sector (-1.0%) surrendered close to 1.0% while the remaining cyclical sectors posted slimmer losses. For its part, the industrial space was pressured by transport stocks as the Dow Jones Transportation Average tumbled 2.6% with JetBlue Airways (JBLU 25.36, -0.85) leading the dive. Shares of JBLU fell 3.2% even though the company reported a one-cent beat on in-line revenue.

Elsewhere among cyclical sectors, technology (-0.6%) traded ahead of the broader market during morning action, but ended among the laggards after IBM (IBM 137.86, -5.80) disclosed that the Securities and Exchange Commission is conducting an investigation into the company's revenue recognition with a focus on transactions in the U.S., U.K., and Ireland. IBM tumbled 4.0% while another influential sector component—Apple (AAPL 114.55, -0.73)—lost 0.6% ahead of its quarterly report.

Moving to the countercyclical side, the consumer staples sector (+0.1%) outperformed slightly, which was largely thanks to an intraday spike in Walgreens Boots Alliance (WBA 95.16, +5.68), brought on by a Wall Street Journal report indicating the company will acquire Rite Aid (RAD 8.67, +2.59) for roughly $10 billion.

On the upside, the health care sector (+1.7%) spent the entire session in the green after Merck (MRK 53.47, +0.56) and Pfizer (PFE 34.99, +0.83) reported better than expected results. The two Dow components posted respective gains of 1.1% and 2.4% while biotechnology also contributed to the strength in the sector with iShares Nasdaq Biotechnology ETF (IBB 327.65, +10.20) spiking 3.2%.

Treasuries rallied throughout the morning, hitting their highs around midday before surrendering a portion of their gains; however, the 10-yr note settled firmly in the green with its yield slipping two basis points to 2.03%.

Today's participation was ahead of recent averages as more than a billion shares changed hands at the NYSE floor.

Economic data included Durable Orders, Consumer Confidence, and Case-Shiller Index:

Durable goods orders declined 1.2% in September after declining a downwardly revised 3.0% (from -2.3%) while the Briefing.com consensus expected a decline of 1.3%

The drop wasn't a surprise as manufacturers are struggling to counteract the negative effects of a strong dollar and global economic weakness

Excluding transportation, durable goods orders declined 0.4% in September after declining a downwardly revised 0.9% (from +0.2%) in August while the consensus expected an increase of 0.2%

The Conference Board's Consumer Confidence Index declined to 97.6 in October from a downwardly revised 102.6 (from 103.0) while the Briefing.com consensus expected a decline to 102.5

The Present Situation Index declined to 112.1 in October from 120.3 while the Expectations Index fell to 88.0 from 90.8

The Case-Shiller 20-city Home Price Index for August rose 5.1% against a 5.0% increase expected by the Briefing.com consensus

This followed the previous month's revised increase of 4.9% (from 5.0%)

Tomorrow, the weekly MBA Mortgage Index will be reported at 7:00 ET.

Nasdaq Composite +6.2% YTD

S&P 500 +0.3% YTD

Dow Jones Industrial Average -1.4% YTD

Russell 2000 -4.8% YTD