Day Traders Diary

1/5/16

The stock market endured a shaky session on Tuesday with the S&P 500 trading inside a 16-point range. The benchmark index spent some time in negative territory, but settled within the upper-end of its trading range, adding 0.2%, while the Nasdaq Composite (-0.2%) underperformed throughout the entire day.

A defensive pre-market affair focused on the Asian session, during which the Shanghai Composite lost 0.3% despite a $20 billion infusion from the People's Bank of China through open market operations. Oil was able to muster an uptick that coincided with a rebound in European indices, but the energy component was unable to maintain that price level.

Equity indices at home began their day higher as the stock market looked to rebound from its poor start to 2016. This rally was short-lived, however, as continued pressure in oil would contribute to a choppy day for the major averages. WTI crude remained weak into the pit close, ending lower by 2.3% at $35.95/bbl.

The countercyclical sectors topped the leaderboard with telecom services (+1.0%), utilities (+0.8%), consumer staples (+0.7%) and health care (+0.6%) ending in the lead while technology (-0.4%), consumer discretionary (-0.2%), materials (UNCH), and industrials (+0.2%) rounded out the sectors.

Looking at health care, the sector was helped by large-cap constituents Bristol-Myers Squibb (BMY 68.35, +1.32) and Eli Lilly (LLY 84.11, +1.24) as the two posted respective gains of 2.0% and 1.5%. Interestingly, Eli Lilly rallied despite lowering its guidance for 2016. Elsewhere in the space, biotechnology underperformed evidenced by iShares Nasdaq Biotechnology ETF (IBB 326.96, +0.09). The ETF neared its 50-day average, hitting a high of 330.97, before retreating with the broader market after the open. The biotech ETF ended the day unchanged after being up 1.3% at the start.

In technology, Apple (AAPL 102.71, -2.64) plummeted 2.6% after Nikkei reported Apple is expected to reduce iPhone 6s and 6s Plus production by 30% in Q1. Elsewhere in the sector, the news weighed on high-beta chipmakers, sending the PHLX Semiconductor Index lower by 1.0%. The index was hurt by poor performances from Avago Technologies (AVGO 137.52, -4.76) and Skyworks Solutions (SWKS 73.29, -4.64) as the two declined 3.4% and 6.0%, respectively.

Treasuries traded near their highs during the retreat from the opening highs in the stock market, but the 10-yr note ended flat with its yield unchanged at 2.25%.

Today's participation was a bit below average as fewer than 850 million shares changed hands at the NYSE floor.

Investors did not receive any economic data of note today, but tomorrow the weekly MBA Mortgage Index will be released at 7:00 ET while the ADP Employment Change for December (Briefing.com consensus 190k) will cross the wires at 8:15 ET. The Trade Balance for November (Briefing.com consensus -$44.70 billion) will be released at 8:30 ET while Factory Orders for November (Briefing.com consensus -0.2%) and December ISM Services (Briefing.com consensus 56.4) will both be reported at 10:00 ET. The day's data will be topped off by the 14:00 ET release of the FOMC Minutes from the December policy meeting.

Nasdaq -2.3%

Russell 2000 -2.2%

Dow Jones -1.5%

S&P 500 -1.3%