Day Traders Diary

3/7/16

The major averages began their week on a flat note as an oil rally was unable to bolster the broader market through the closing bell. Contributing factors to today's trade included a consolidation from the recent three-week winning streak, the underperformance of the heavyweight technology (-0.7%) and consumer discretionary (-0.5%) spaces, and anxiety regarding upcoming central bank policy meetings. The Nasdaq Composite (-0.2%) ended its day behind S&P 500 (+0.1) and the Dow Jones Industrial Average (+0.4%).

The benchmark index was unable to maintain the bulk of its advance despite a sustained rally in energy (+2.4%) and crude oil. The energy component surged 5.5% to $37.90/bbl, continuing its recent winning streak. On that note, WTI crude has jumped 45.5% from its 52-week low of $26.05/bbl on February 11.

The materials sector (+1.2%) was a distant second while countercyclical health care (+0.8%), telecom services (+0.7%), and utilities (+0.6%) followed. Conversely, heavily-weighted technology (-0.7%) and consumer discretionary (-0.5%) rounded out the leaderboard.

Commodity-sensitive materials received a boost from an overnight surge in iron ore, but also outperformed thanks to large cap DuPont (DD 64.71, +1.53). The company climbed 2.4% on news that BASF (BASFY 69.95, +0.66) is considering a counter bid for DuPont during its pending merger with Dow Chemical (DOW 49.76, -0.53).

In the technology sector, large-cap components underperformed with Facebook (FB 105.73, -2.66) and Alphabet (GOOGL 712.80, -17.42) diving 2.4% apiece. Meanwhile, the PHLX Semiconductor Index demonstrated relative strength as it ticked higher by 0.3%. The relative strength came despite noticeable weakness from constituents Micron Technology (MU 11.58, -0.30) and Broadcom (AVGO 143.51, -2.55) which surrendered 2.5% and 1.8%, respectively.

Meanwhile, large names also suffered in the consumer discretionary space (-0.5%). To that point, Amazon (AMZN 562.80, -12.34) and Nike (NKE 59.25, -2.01) plunged a respective 2.2% and 3.3%. Separately, influential Netflix (NFLX 95.49, -6.09) plunged 6.0% after ITG Research cast doubt on the company's domestic streaming estimates.

On the central bank front, slightly diverging opinions between Fed Vice Chairman Stanley Fischer and Fed Governor Lael Brainard cast some light on next week's Federal Open Market Committee meeting. Mr. Fischer contended that inflation is showing signs of acceleration in the U.S. while Ms. Brainard cautioned patience for raising rates in light of tightening financial conditions and softer inflation expectations.

The U.S. Dollar Index (97.10, -0.24) fell today as the euro and the yen gained some steam against dollar. The euro/dollar pair trades higher by 0.1% at 1.1014 while the dollar/yen pair slipped 0.3% to 113.41, but ended off its high (113.73).

Trading volume fell roughly in-line with the recent average as more than 1.10 billion shares changed hands on the NYSE floor.

Treasuries hit their lows during the height of the rally in equities and ended their day near those levels. The yield on the 10-yr note ended higher by three basis points at 1.91%.

Today's economic data included the January Consumer Credit report:

Total outstanding consumer credit increased by $10.5 billion in January. That was below the Briefing.com consensus estimate, which called for growth of $16.5 billion, but up from December when total outstanding consumer credit, which can be prone to sizable revisions, increased by a downwardly revised $6.4 billion (from $21.3 billion).

Total outstanding consumer credit of $3.54 trillion increased at an annual rate of 3.6% in January.

The growth in January was led by a pickup in nonrevolving credit, which increased by $11.6 billion. Revolving credit actually contracted by $1.1 billion.

In the preceding 12-month period leading up to January, consumer credit had risen by an average of $18.0 billion.

There is no economic data of note on tap for tomorrow.

Nasdaq Composite -6.0% YTD

Russell 2000 -3.8% YTD

S&P 500 -2.1% YTD

Dow Jones -2.0% YTD