Day Traders Diary

1/7/16

The stock market ended the Thursday affair broadly lower after a volatile start to the trading day. The sharply lower start to the day was brought on by renewed global growth concerns and worries about incoming deflationary pressures. A sharp decline in oil prices underscored these market concerns. The tech-heavy Nasdaq (-3.0%) trailed the S&P 500 (-2.4%) and the Dow Jones Industrial Average (-2.3%).

Global equity markets were focused on action in China, where the CSI 300 Index tumbled 6.9%, ending its day a mere 45 minutes after the opening bell. The index declined 5.0% before prompting a 15 minute halt. This stay was unable to quell selling pressure and once trading was resumed, the index surrendered a further 1.9% before endings its day early, with a loss of 6.9%.

News of this decline worked to temper trading in other regional and international indices, pressuring oil throughout the night. Oil traded under the $34.00/bbl level but rallied into the U.S. open, which fostered a brief rebound in equities; however, stocks tumbled to new lows in the early afternoon after Reuters reported that the People's Bank of China is likely to continue devaluing the yuan by as much as 15.0%. WTI crude would eventually back away from its flat line, sliding lower by 2.1% to $33.27/bbl by the end of its pit session.

On the leaderboard, technology (-3.1%), financials (-2.8%), industrials (-2.8%), materials (-2.7%), and energy (-2.4%) lead the downside while utilities (-0.7%), telecom services (-1.3%), consumer staples (-1.3%), and consumer discretionary (-2.0%) outperformed.

In the industrial sector, the Dow Jones Transportation Average fell 3.0% with all of its components ending in negative territory. Airlines saw some of the steepest losses with United Continental Holdings (UAL 52.63,-2.57) and Delta Airlines (DAL 46.00, -1.93) surrendering 4.7% and 3.8%, respectively. Elsewhere in the index, FedEx (FDX 134.59, -6.18) outpaced the losses, falling 4.4%

In technology, the top-weighted sector was subject to heavy selling in big names and influential components like Apple (AAPL 96.45, -4.25), Microsoft (MSFT 52.17, -1.88), and Facebook (FB 97.92, -5.05). The three stocks ended with losses between 3.2% and 4.9%. Meanwhile, the high-beta chipmakers remained under heavy pressure evidenced by a 2.9% decline in the PHLX Semiconductor Index.

Elsewhere, the economically-sensitive financial sector had a rough outing, as exposure to Chinese currency devaluation and emerging markets holdings pushed the group to the bottom of the leaderboard. JPMorgan Chase (JPM 60.27, -2.54), Bank of America (BAC 15.50, -0.58), and Wells Fargo (WFC 50.40, -1.48) surrendered between 2.9% and 4.0%.

Moving to Treasuries, the benchmark note registered a slim gain after climbing off its intraday low. As a result, the 10-yr yield ticked down two basis points to 2.15%.

Once again, investor participation was above average as 1.1 billion shares changed hands on the floor of the NYSE.

Today's economic data included, Initial claims for the week ending January 2nd which decreased by 10,000 to 277,000. This was above the Briefing.com consensus estimate of 270,000 but within the 250,000 to 300,000 range that has persisted since July 2014. The prior week's claims level was unrevised. Continuing claims for the week ending December 26 were 2.230 million, an increase of 25,000 from the previous week's revised level of 2.205 million (from 2.198 million).

Tomorrow, the December nonfarm payrolls report (Briefing.com consensus 200k) will be released at 8:30 ET. While November wholesale inventories (Briefing.com consensus -0.1%) and November consumer credit (Briefing.com consensus $18.50 billion) will be reported at 10:00 ET and 15:00 ET, respectively.

Nasdaq -6.4% YTD

Russell 2000 -6.2% YTD

Dow Jones Industrial Average -5.2% YTD

S&P 500 -4.9% YTD