Day Traders Diary

12/23/15

The major averages enjoyed a broad-based rally on Wednesday and the steady climb was undoubtedly facilitated by light trading volume ahead of tomorrow's abbreviated Christmas Eve session. The S&P spiked 1.2%, ending right above its 50-day (2,063) moving average, and the Nasdaq Composite (+0.9%) followed not far behind.

Equity indices registered roughly half of their gains right at the open, rallying behind the energy sector (+4.4%), which held a solid lead throughout the day thanks to a rally in crude oil. The energy component surged 3.8% to $37.50/bbl, catching a second wind from bullish inventory data; however, it wasn't just energy, as every other sector ended the day comfortably in the green.

The materials sector (+2.4%) was a distant second while heavily-weighted financials (+1.2%), industrials (+1.2%), and health care (+1.1%) settled near the broader market. Meanwhile, the top-weighted technology sector (+0.8%) spent the day behind the S&P 500 as several large cap components like Alphabet (GOOGL 768.51, +1.38), Qualcomm (QCOM 49.04, -0.02), and Facebook (FB 104.63, -0.88) lagged.

Elsewhere in the technology sector, high-beta chipmakers benefitted from the overall rally in the market, but the PHLX Semiconductor Index underperformed with a 0.7% gain as Micron (MU 14.29, -0.32) weighed. Shares of MU flirted with a new low for the year, settling lower by 2.2% after the company's below-consensus revenue and disappointing guidance masked a one-cent beat.

Staying on the earnings theme, Nike (NKE 128.71, -3.14) beat earnings estimates on below-consensus revenue and its stock surged to a fresh all-time high at the open, but that was followed by daylong selling that left the Dow component lower by 2.4% when the closing bell rang. Furthermore, the consumer discretionary sector (+0.5%) as a whole struggled to keep pace with the market amid weakness in select retailers and homebuilders, with the latter stumbling after the release of a disappointing November new home sales report that contained a downward revision to October data.

Trading volume was well below average for the second consecutive day as fewer than 820 million shares changed hands at the NYSE floor.

Treasuries hit their lows in morning action, erasing about a third of their losses into the afternoon. The 10-yr yield rose two basis points to 2.26% after testing 2.28% intraday.

Economic data included Durable Orders, Personal Income/Spending data, New Home Sales, Michigan Sentiment, and MBA Mortgage Index:

Durable goods orders were unchanged in November (Briefing.com consensus -0.7%) following a downwardly revised 2.9% increase in October (from 3.0%)

Orders, excluding transportation, declined 0.1% (Briefing.com consensus 0.0%) following an unrevised 0.5% increase in October

The Personal Income and Spending report for November caused a stir since the spending data was inadvertently released early. It showed a 0.3% increase in spending, as expected, driven by a 0.6% increase in goods spending and a 0.2% increase in services spending

Real PCE increased 0.3%, which is a positive input for fourth quarter GDP computations

Personal income rose 0.3% in November (Briefing.com consensus +0.3%) following a downward revision to unchanged (from +0.1%) in October. The income growth was driven by a 0.5% increase in wages and salaries and a 0.8% increase in rental income

The PCE Price Index, which is the Fed's preferred inflation gauge, was flat in November while the core PCE Price Index, which excludes food and energy, rose 0.1% (Briefing.com consensus +0.2%)

New home sales were at a seasonally adjusted annual rate of 490,000 in November (Briefing.com consensus 505,000), up 4.3% from a downwardly revised 470,000 (from 495,000) in October

The large downward revision to October, as well as slight downward revisions to September and August sales made the report a disappointment

From a regional perspective, the Northeast and the Midwest were the biggest drags in November as new home sales there declined 28.6% and 8.6%, respectively

The West region, however, saw a robust 20.0% increase in new home sales while the South saw a 4.5% increase

The final reading for the December University of Michigan Consumer Sentiment Index was revised up to 92.6 (Briefing.com consensus 92.0) from a preliminary reading of 91.8

The Current Economic Conditions Index jumped to 108.1 from 104.3 while the Index of Consumer Expectations dipped to 82.7 from the final reading of 82.9 for November

The weekly MBA Mortgage Index rose 7.3% to follow last week's 1.1% decline

Tomorrow's economic data will be limited to the 8:30 ET release of the weekly Initial Claims report (Briefing.com consensus 271,000) and light trading volume is expected with NYSE set to close at 13:00 ET.

Nasdaq Composite +6.5% YTD

S&P 500 +0.3% YTD

Dow Jones Industrial Average -1.2% YTD

Russell 2000 -4.1% YTD