Day Traders Diary

12/30/15

The major indices ended Wednesday on a negative note after the market faced substantial selling pressure into the close with all the major indices settling near their lows. Despite the retreat today, the S&P 500 (-0.7%) was able to stay in positive territory for the year (+0.2%). The benchmark index outperformed the tech-heavy Nasdaq (-0.8%), which narrowed its 2015 advance to 7.0%.

Equity indices slipped into the open after overnight selling pressure in oil drove the commodity below the $37.00/bbl price level. This price action came after the American Petroleum Institute reported that crude stockpiles rose by 2.9 million barrels versus a decrease of 3.6 million barrels last week. An hour after the open, the Energy Information administration disclosed a build of 2.629 million barrels on their weekly crude inventory report versus an expected draw of 2.457 million barrels. The commodity fell 2.9% on the day, ending at $36.80/bbl.

Accordingly, the commodity-sensitive energy (-1.5%) and materials (-1.0%) sectors posted the largest losses while utilities (-0.2%), consumer staples (-0.4%), healthcare (-0.5%), industrials (-0.8%), technology (-0.8%), consumer discretionary (-0.8%), and financials (-0.8%) outperformed.

In the energy space, large-components Exxon Mobil (XOM 78.11, -1.05) and Chevron (CVX 90.09, -1.16) kept pace with the decline in the broader sector, while pipeline and equipment companies such as Kinder Morgan (KMI 14.54, -0.56) lead the losses thanks to a corresponding drop in natural gas. The other energy component declined 5.3% today and ended at $2.25/MMbtu.

Elsewhere, in the health care group (-0.5%), the influential sector was helped by large-cap components Merck & Co. (MRK 53.22, -0.09) and AbbVie, Inc. (ABBV 59.80, +0.35) as the two helped the sector stay ahead of the broader market. Merck lost 0.2% and AbbVie added 0.8%. Meanwhile, biotechnology finished behind the sector, evidenced by a 0.7% decline in iShare Nasdaq Biotechnology ETF (IBB 340.86, -2.25).

In Treasuries, the benchmark note spent most of its day near its low, but investor participation was well below average, leaving the 10-yr yield unchanged at 2.30%  On a somewhat related note, Puerto Rico's Governor Alejandro Garcia Padilla stated that the island will default on a $35.90 million payment due to the Infrastructure Finance Authority and a $1.40 million payment due to its Public Finance Corporation. However, Puerto Rico will pay $328.70 million to settle its general obligations, thus avoiding fallout from defaulting on debt backed by constitutional guarantees.

Once again, today's participation was very light with fewer than 600 million shares changing hands at the NYSE floor.

It was a quiet day with economic data limited to November Pending Home Sales, which fell 0.9% from a revised increase of 0.4% (from 0.2%) in October. The Briefing.com consensus expected an increase of 0.5% in November.

Tomorrow's economic data includes, weekly Initial (Briefing.com consensus 270,000) and Continuing Claims (Briefing.com consensus 2213k), which will be released at 8:30 ET while the Chicago PMI for December (Briefing.com consensus 50.1) will cross the wires at 9:45 ET.

Nasdaq +7.0% YTD

S&P 500 +0.2% YTD

Dow Jones -1.2% YTD

Russell 2000 -4.7% YTD