Day Traders Diary

8/30/15

The stock market ended the week on a lower note, but that did not stop the S&P 500 from posting its largest monthly gain since October 2011. The benchmark index lost 0.5% on Friday, but surged 8.3% for the month while the Nasdaq Composite (-0.4%) outperformed, spiking 9.4% in October.

Broadly speaking, the Friday session was very quiet with the market showing a modest loss during morning action, which turned into a slim afternoon gain; however, a late slide from session highs ensured a lower finish for the S&P 500.

Despite the lower finish, only five of ten sectors posted losses, but relative weakness in heavily-weighted groups like financials (-1.3%), technology (-0.8%), and consumer staples (-1.1%) was enough to keep the market pressured.

The financial sector retreated throughout the day, narrowing its October gain to 6.1%. Meanwhile, the top-weighted technology space (-0.8%) also underperformed, but the influential sector surged 10.7% in October. Large cap names like Apple (AAPL 119.50, -1.03), Google (GOOGL 737.39, -7.46), and Microsoft (MSFT 52.64, -0.72) struggled on Friday, masking relative strength in the PHLX Semiconductor Index, which rose 0.9%. ON Semiconductor (ON 11.00, +0.72) was a notable standout, soaring 7.0%, in reaction to better than expected results.

Elsewhere, the consumer staples sector (-1.1%) retreated amid disappointing earnings and/or guidance from Colgate-Palmolive (CL 66.35, -2.88), CVS Health (CVS 98.78, -5.02), and Boston Beer (SAM 219.42, -25.52). The three names lost between 4.2% and 10.4% while the broader sector narrowed its October gain to 5.6%.

On the flip side, the energy sector (+0.7%) finished in the lead after struggling at the start. However, the sector climbed during the afternoon to extend its October gain to 11.3%. Crude oil contributed to the afternoon rally as WTI crude rose 1.2% to $46.60/bbl while earnings also played a part. To that point, Chevron (CVX 90.88, +0.99), ExxonMobil (XOM 82.74, +0.51), and Phillips 66 (PSX 89.10, +2.67) all delivered better than expected results.

Unlike stocks, Treasuries spent the bulk of the day in the green with the 10-yr yield slipping three basis points to 2.15%.

Today's participation was ahead of average with more than a billion shares changing hands at the NYSE floor with month-end flows contributing to the increased activity.

Economic data included Employment Cost Index, Personal Income/Spending data, Chicago PMI, and Michigan Sentiment:

Employment costs increased 0.6% in Q3 2015, up from a 0.2% increase in the second quarter while the Briefing.com consensus expected an increase of 0.5%

Despite the big quarterly gain, year-over-year trends were unchanged with total compensation increasing only 2.0% in the third quarter, which matched the rate of increase from the second quarter

Personal income increased 0.1% in September after increasing an upwardly revised 0.4% (from 0.3%) in August while the Briefing.com consensus expected an increase of 0.2%

Personal spending rose 0.1% in September after increasing 0.4% in August while the consensus expected an increase of 0.2%

The Chicago PMI increased to 56.2 in October from 48.7 in September while the Briefing.com consensus expected an increase to 49.0

That was the best reading in the Chicago PMI since reaching 59.4 in January

The Production Index increased to 63.4 in October from 43.6 in September, representing the largest one-month gain since August 2014

The University of Michigan Consumer Sentiment Index was revised down to 90.0 in the final October reading from 92.1 in the preliminary report while the Briefing.com consensus expected a revision up to 92.6

Despite the downward revision, sentiment remains stronger than the final September (87.2) level

The Current Conditions Index was revised down to 102.3 in the final October reading from 106.7 while the Expectations Index was revised down to 82.1 from 82.7

Monday's economic data will be limited to the 10:00 ET release of September Construction Spending and the October ISM Index.

Nasdaq Composite +6.7% YTD

S&P 500 +1.0% YTD

Dow Jones Industrial Average -0.9% YTD

Russell 2000 -3.5% YTD