Day Traders Diary

3/9/16

The major averages ended their midweek affair on a higher note as a leg higher in oil supported a modest gain in the stock market. Additionally, leadership from the heavyweight technology sector (+1.0%) countered some choppy trade from the likes of the financial (+0.1%), consumer discretionary (+0.1%), and health care (+0.2%) sectors. Today's action preceded tomorrow's policy statement from the European Central Bank, which is widely believed to call for additional stimulus measures. The Nasdaq Composite (+0.6%) settled ahead of the S&P 500 (+0.5%) and the Dow Jones Industrial Average (+0.2%).

Equities displayed modest gains in the early going, reaching their best levels shortly after the release of the Department of Energy's weekly inventory report. The report showed that crude oil inventories rose in-line with analyst estimates, but that gasoline inventories experienced a larger-than-expected draw (4.53 million; consensus 1.39 million). This echoed the results of the API report and led to a bid in crude oil, as investors believed that drawdowns in gasoline inventories would drive increased demand in oil for future refining. As a result, WTI crude ended its day higher by 4.8% at $38.23/bbl.

Commodity-sensitive energy (+1.5%) was able to take advantage of this swing in oil prices, climbing the leaderboard. Meanwhile, the top-weighted technology sector (+1.0%) finished in the second spot.

In the energy sector (+1.5%), oil and gas refining names were able to outperform as Marathon Petroleum (MPC 37.06, +1.89) gained 5.4%. Meanwhile, Dow component Chevron (CVX 92.82, +4.08) managed to top the price-weighted index as it climbed 4.6%. The energy space managed to re-enter positive territory for the year with today's trade, as the group shows a gain of 0.7% over that period.

Heavily-weighted technology (+1.0%) received a boost from large-cap component Microsoft (MSFT 52.84, +1.19), which managed to reclaim its 50-day moving average (52.24). Separately, Cisco Systems (CSCO 27.61, +0.56) benefited from some M&A news as the company announced that it would be acquiring Synata for an undisclosed amount.

On the bottom of the leaderboard, telecom services (-0.3%) led the downside while heavily-weighted financials (+0.1%), consumer discretionary (+0.1%), and health care (+0.2%) underperformed. Biotechnology weighted on the health care space as the iShares Nasdaq Biotechnology ETF (IBB 257.13, 3.00) surrendered 1.2%.

In the economically sensitive financial sector (-0.1%), Morgan Stanley (MS 24.61, -0.40) surrendered 1.6%. The company has plunged 4.8% since Monday whereas the broader sector has lost 1.6% over that period. Meanwhile, Franklin Resources (BEN 37.41, -0.59) tumbled 1.6% after the company reported that preliminary month-end assets under management totaled $714 billion compared to the $728.1 billion under management in January.

Chipotle Mexican Grill (CMG 506.63, -18.06) displayed relative weakness in the consumer discretionary space (+0.1%) after it was confirmed that one of the sick employees at its Billerica, Massachusetts location was infected by norovirus. The location has been cleared to open on Thursday. Separately, large-cap Home Depot (HD 126.03, -0.69) fell 0.5%.

The Dollar Index (97.17, -0.03) ticked up off its session low as the euro/dollar pair backed away from its high of 1.1029 to trade lower by 0.1% at 1.1002. Separately, the dollar/yen pair rose 0.7% to 113.40.

The Treasury complex traded broadly lower throughout the day as the yield on the 10-yr note slipped five basis points to 1.88%.

Today's participation was below the recent average with fewer than 933 million shares changing hands at the NYSE floor.

Today's economic data included the weekly MBA Mortgage Index and the January Wholesale Inventories Report:

The weekly MBA Mortgage Index was showed a seasonally adjusted increase of 0.2% in mortgage applications.

Wholesale inventories increased 0.3% in January from an upwardly revised unchanged reading (from -0.1%) for December. The Briefing.com consensus estimate called for a 0.2% decline in January wholesale inventories, which are up 2.0% year-over-year.

The gain in January was driven by a 1.1% increase in nondurable inventories. Inventories of durable goods actually declined 0.3%.

The uptick in nondurable inventories was driven by drug (+3.3%) and farm products (+2.9%) inventories. The biggest increase was in paper inventories (+4.2%), although they make up just 3.6% of total nondurable inventories.

With respect to durable inventories, the biggest weights were the declines in electrical (-3.6%) and metals (-1.8%) inventories. Machinery inventories, which account for 29% of total durable inventories, rose 0.2% after a 0.4% decline in December.

Wholesale sales dropped 1.3% in January after a 0.6% decline in December. Durable sales were down 1.9% while nondurable sales fell 0.8%.

The wholesale inventories to sales ratio jumped to 1.35 in January from 1.33 in December. This ratio stood at 1.28 in the same period a year ago.

Tomorrow's economic data includes weekly initial claims (Briefing.com consensus 275k) and the Treasury Budget for February, which will cross the wires at 8:30 ET and 14:00 ET, respectively.

Nasdaq Composite -6.7% YTD

Russell 2000 -5.6% YTD

S&P 500 -2.7% YTD

Dow Jones -2.4% YTD