Day Traders Diary

11/4/15

The stock market snapped its two-day streak on Wednesday, but the midweek pullback was fairly modest in scope. The S&P 500 shed 0.4% while the Nasdaq Composite (-0.1%) outperformed, settling just below its flat line.

Equity indices began the day on a modestly higher note, but the slight early strength faded quickly, sending the major averages into the red during the opening hour. In addition, investors heard from Fed Chair Janet Yellen who addressed the House Financial Services Committee to discuss regulation and supervision of financial institutions; however, the Q&A portion drifted towards questions about the upcoming December policy meeting with Fed Chair Yellen reiterating that a rate hike could happen in December if economic data shows improvement.

Eight sectors ended the day in negative territory with energy (-1.0%) spending the bulk of the session behind the remaining nine groups. It is worth noting that today's slide followed a 5.0% gain over the past two days and the sector also had to contend with selling in the commodity market where crude oil fell 3.4%, ending the pit session at $46.32/bbl.

Unlike energy, the remaining decliners posted slimmer losses than 0.7%, but relative weakness among the likes of consumer discretionary (-0.6%) and health care (-0.5%) kept the market in negative territory until the close.

The discretionary sector underperformed with apparel retailers ending mostly lower, which overshadowed a better than expected earnings report from Michael Kors (KORS 42.58, +3.26). Shares of KORS spiked 8.3% after better than expected results and upbeat fiscal-year 2016 guidance overshadowed a cautious outlook for Q3. Elsewhere in the sector, media names also lagged even though CBS (CBS 47.96, -0.28) and Time Warner (TWX 72.19, -5.11) reported better than expected results.

On the upside, the technology sector (+0.1%) outperformed, spending the trading day in the neighborhood of its flat line, which prevented a larger pullback from taking shape. Large cap components ended the day on a mixed note while chipmakers outperformed with the PHLX Semiconductor Index climbing 0.3%.

Similar to stocks, Treasuries retreated with the 10-yr yield rising two basis points to 2.23%.

Today's participation was ahead of average as more than 900 million shares changed hands at the NYSE floor.

Economic data included ADP Employment, Trade Balance, and ISM Services:

The ADP National Employment Report revealed that employment in the nonfarm private business sector rose by 182,000 in October while the Briefing.com consensus expected a reading of 180,000

The September reading was revised down to 190,000 from 200,000

The U.S. trade deficit narrowed in September to $40.80 billion from an upwardly revised $48.00 billion (from -$48.30 bln) in August while the Briefing.com consensus expected a reading of $43.00 billion

Notably, the September trade deficit was not that far off from the BEA's estimate of -$40.60 billion that was embedded in the advance Q3 GDP report. Accordingly, revisions to net exports shouldn't have much bearing on the second estimate for Q3 GDP

The improvement in September was owed to imports being $4.20 billion less than August imports and exports being $3.00 billion more than August exports

The ISM Services index jumped to 59.1 in October from 56.9 in September while the Briefing.com consensus expected a reading of 56.6

The October reading was the second-highest mark this year, preceded only by the 60.3 reading in July, which was the highest level since August 2005

Tomorrow, weekly Initial Claims (Briefing.com consensus 262,000) and preliminary Q3 Productivity/Unit Labor Cost data will be reported at 8:30 ET.

Nasdaq Composite +8.6% YTD

S&P 500 +2.1% YTD

Dow Jones Industrial Average +0.3% YTD

Russell 2000 -1.1% YTD