Day Traders Diary

3/2/16

The stock market ended its Wednesday affair on a higher note as investors focused on rate hike implications from a better-than-expected reading of the ADP National Employment Report and rising oil prices. Meanwhile, strong sector leadership from the financial group (+0.9%) helped fuel today's advance. The S&P 500 (+0.4%) managed to outperform both the Nasdaq Composite (+0.3%) and the Dow Jones Industrial Average (+0.2%).

Before the opening bell, investors digested the February ADP Employment Change report, which indicated an increase of 214,000 over the past month (Briefing.com consensus 190,000). This above-consensus reading added to the recent slew of positive data that may lend itself to rationalizing a potential rate hike sooner than the market currently expects. Additionally, this report precedes the more influential Employment Situation Report, which will be released on Friday.

Separately, the Department of Energy's weekly inventory report showed a larger-than-expected crude inventory build (10.4 million barrel build; est 3.6 million). Despite the bearish reading oil managed to rise sharply after the report before ending its day off its best level. WTI crude ended its pit session higher by 0.5% at $34.57/bbl.

The positive move in oil helped the commodity-sensitive energy space (+2.5%) top the leaderboard as telecom services (+1.1%) and the financial sector (+0.9%) followed. Meanwhile, heavyweights health care (+0.2%) and technology (+0.2%) ended their day off their lows.

In the energy space, independent oil and gas names managed to top the leaderboard. On that note, Anadarko Petroleum (APC 42.65, +2.54) managed to climb 6.3% while ConocoPhillips (COP 36.49, +2.03) advanced 5.9%. Dow component Exxon Mobil (XOM 82.70, +1.42) gained 1.8% after the company stated, at its analyst meeting, that it could fund new capital projects as well as maintain its dividend.

Economically-sensitive financials (+0.9%) likely benefited from potential increases in their earnings prospects as the fed fund futures market estimates the likelihood of a rate increase at the FOMC's December meeting at 63.0%. Meanwhile, the sector continues to rebound from a difficult start to the year. On that note, Citigroup (C 42.22, +0.95) and Bank of America (BAC 13.41, +0.27) climbed a respective 2.3% and 2.1% today, but remain down 18.4% and 20.3%, respectively, for the year.

The health care space (+0.2%) ended above its flat line as biotechnology outperformed. The iShares Nasdaq Biotechnology ETF (IBB 268.12, +2.85) gained 1.1%.

The Federal Reserve released its March Beige Book, which described overall economic activity across the twelve Fed Districts as expanding at a "modest" or "moderate" pace. Consumer spending increased in the majority of districts while manufacturing activity was described as flat for the most part. With regard to wages and inflation, the Beige Book described price levels as rising slightly while wage growth was described as ranging from "flat" to "strong".

The Treasury complex traded narrowly lower throughout today's session. The yield on the 10-yr note ended higher by one basis point at 1.84%.

Meanwhile, the U.S. Dollar Index (98.18, -0.17) tumbled as the dollar/yen pair ended the day lower by 0.6% at 113.39.

Today's participation fell in-line with the recent average with more than 1.065 billion shares changing hands at the NYSE floor.

Today's economic data included the weekly MBA Index, the February ADP Employment Change report, and the Fed's Beige Book for March:

The weekly MBA Mortgage Index showed a seasonally adjusted decrease of 4.8% in mortgage applications.

The ADP National Employment Report showed a 214,000 increase in February (Briefing.com consensus 190,000) while the January reading was revised lower to 193,000 from 205,000.

The ADP reading precedes Friday's more influential government Employment Report, which is expected to show a 190K increase in Nonfarm Payrolls, greater than last month's 151K increase.

Tomorrow's economic data will include the 7:30 ET release of the Challenger Job Cuts report for February. Meanwhile, weekly initial claims (Briefing.com consensus 270k), Q4 Productivity (Briefing.com consensus -3.3%), and Unit Labor Cost data (Briefing.com consensus +4.7%) will be released at 8:30 ET. Finally, January Factory Orders (Briefing.com consensus +2.0%) and ISM Services (Briefing.com consensus +53.1) will cross the wires at 10:00 ET.

Russell 2000 -6.3% YTD

Nasdaq -6.1% YTD

Dow Jones -3.0% YTD

S&P 500 -2.8% YTD