Day Traders Diary

11/5/15

The major averages registered their second consecutive decline on Thursday with the S&P 500 shedding 0.1% while the Nasdaq Composite (-0.3%) underperformed.

Broadly speaking, the Thursday affair was fairly quiet, but that was not particularly surprising considering Friday morning will feature the release of the Employment Situation report for October. The Briefing.com consensus expects the report to reveal the addition of 181,000 payrolls while hourly earnings are expected to have increased 0.2% in October.

Tomorrow's report could lead to volatility in the market, making today's reluctance among investors to push the market in either direction rather understandable. The S&P 500 is set to enter the Friday session with a week-to-date gain of 1.0% while the Nasdaq is higher by 1.5% for the week despite today's underperformance.

Biotechnology was largely responsible for today's relative weakness in the tech-heavy Nasdaq. Valeant Pharmaceuticals (VRX 78.77, -13.21) was in focus once again as the stock dove 14.4% amid continued concerns about the company's revenue recognition practices. However, biotech's woes were not isolated to Valeant as Gilead Sciences (GILD 107.83, -1.15) lost 1.1% while Celgene (CELG 120.46, -6.71) dove 5.3% after reporting a one-cent beat on below-consensus revenue. For its part, the broader iShares Nasdaq Biotechnology ETF (IBB 331.16, -6.47) lost 1.9% while the health care sector surrendered 0.4% after being down more than 1.0% in the early going.

Similar to health care, influential sectors like energy (-1.0%) and technology (-0.3%) also finished among the laggards. The energy sector narrowed its week-to-date gain to 2.9% amid a decline in crude oil. To that point, WTI crude fell 2.3% to $45.26, widening this week's decline to 2.9% after being up nearly 4.0% at its best level on Tuesday.

As for technology, the top-weighted sector struggled amid weakness in the chipmaker arena after Qualcomm's (QCOM 51.07, -9.19) cautious guidance overshadowed better than expected earnings. Shares of QCOM fell 15.3% while the PHLX Semiconductor Index fell 2.1%. Elsewhere in the tech sector, Facebook (FB 108.76, +4.82) surged 4.6% in reaction to better than expected results.

Treasuries spent the day in negative territory, ending roughly in the middle of their ranges with the 10-yr yield rising one basis point to 2.24%.

Today's participation was roughly in line with average as more than 870 million shares changed hands at the NYSE floor.

Economic data released today included initial claims and productivity/unit labor cost data:

Initial claims for the week ending October 31 increased 16,000 to 276,000 (Briefing.com consensus 262,000) from an unrevised 2600,000 level in the prior week. There were no special factors influencing the jump in claims, which are still running at encouragingly low levels.

The four-week moving average for initial claims increased by 3,500 to 259,250

Continuing claims for the week ending October 24 increased 17,000 to 2.163 million (Briefing.com consensus 2.145 mln) from the prior week's upwardly revised level of 2.146 million (from 2.144 mln)

The preliminary third quarter productivity report showed nonfarm business productivity increasing 1.6% quarter to quarter (Briefing.com consensus -0.2%) versus 3.5% in the second quarter

Output increased 1.2% while hours worked decreased 0.5%, marking the first decline in that series since the third quarter of 2009

Unit labor costs were up just 1.4% (Briefing.com consensus 2.2%)

Tomorrow, October Nonfarm Payrolls (Briefing.com consensus 181,000) will be reported at 8:30 ET while the September Consumer Credit report (consensus $18.00 billion) will be released at 15:00 ET.

Nasdaq Composite +8.3% YTD

S&P 500 +2.0% YTD

Dow Jones Industrial Average +0.2% YTD

Russell 2000 -1.1% YTD