Day Traders Diary

1/4/16

The stock market ended its first session of 2016 broadly lower, following opening selling pressure that wouldn't ease until the last half hour of trading. The S&P 500 (-1.5%) finished ahead of the Dow Jones Industrial Average (-1.6%) and the Nasdaq (-2.1%), but the benchmark index fell below its 100-day moving average (2024). The major averages stumbled into the open after overseas concerns in China and the Middle East weighed down futures.

The selloff in futures began with weak economic data concerning manufacturing growth in China. Overnight, December's Caixin Manufacturing PMI was reported in at 48.2 versus an expected 48.9. This miss lead to heavy selling in the Shanghai Composite that eventually pushed the index lower by 6.9% before triggering a halt to trading under its circuit breaker provisions.

In the Middle East, Saudi Arabia suspended diplomatic relations with Iran following a protester-started fire at the Saudi Arabian embassy in Tehran. This unrest followed the execution of a Shiite cleric by the Saudi Arabian government over the weekend. The initial news caused an increase interest in oil, but the commodity was unable to maintain today's advance and WTI crude ended its pit session down 0.8% at $36.76/bbl.

Today's selling was paced by financials (-2.1%), health care (-1.9%), consumer discretionary (-1.8%), materials (-1.7%), and technology (-1.6%) while energy (-0.2%), utilities (-0.3%), and telecom services (-0.5%) outperformed

The financial sector showed relative weakness from the start of the trading session with large cap-components JPMorgan Chase (JPM 63.62, -1.97) and Wells Fargo (WFC 52.91, -1.45) each outpacing the losses in the broader sector with declines of 3.0% and 2.7% respectively.

Elsewhere, the top-weighted technology sector ended in line with the S&P 500 even though Apple (AAPL 105.35, +0.09) was able to rebound off its session low (102.00), ending higher by 0.1%. In other tech names, Alphabet (GOOGL 759.44, -18.57) was also able to pull off of its low, trimming its loss to 2.4%, while high-beta chipmakers outperformed the broader sector for most of the day. The PHLX Semiconductor Index ended the session lower by 1.1%.

In the consumer discretionary space, Amazon (AMZN 636.98, -38.91) ended its day near its low following a downgrade at Monness Crespi & Hardt from Buy to Netural. The downgraded cited continued strength in the company but a possibly better entry point to enter or expand a position in the company.

Today's selloff invited above average participation with more than a billion shares changing hands at the NYSE floor.

Meanwhile in Treasuries, the benchmark note spent the bulk of its day on its high before retreating. The yield on the 10-yr fell three basis points to 2.24%.

It was a relatively quiet day on the economic front with data being limited to the December ISM Index and Construction Spending:

The ISM Index for December declined to 48.2 from 48.6 (Briefing.com consensus 49.0)

Construction spending decreased to -0.4% month-over-month growth in November (Briefing.com consensus 0.8%).

This release was lower than expected and included a revision from 1.0% to 0.3% month-over-month growth in October.

Investors will not receive any economic data of note tomorrow.

Russell 2000 -2.3% YTD

Nasdaq -2.1% YTD

Dow Jones -1.6% YTD

S&P 500 -1.5% YTD