Day Traders Diary

3/22/16

The stock market opened the Tuesday affair under moderate selling pressure as investors responded to news of terror acts in Brussels. Since the opening half hour, the major indices have been able to move off their worst levels of the day, and now trade on a higher note. Contributing factors to today's trade have included the outperformance of the heavily-weighted technology (+0.3%) and health care (+1.0%) spaces, as well as resilience from the commodity-sensitive energy sector (+0.2%). At midday, the Nasdaq Composite (+0.4%) outperforms the S&P 500 (+0.2%) and the Dow Jones Industrial Average (+0.1%).

Futures slipped in the early morning hours following reports of a pair of terror acts in Belgium's capital of Brussels. Two explosions were set off, one at the Brussels airport and the other taking place in the city's metro system. Currently, reports indicate that 34 people have been killed in the two attacks while 186 more were injured. The explosions occurred four days after the capture of Salah Abdeslam, a suspect in November's Paris attacks, and recently ISIS claimed responsibility for the attacks.

As a result, the cash markets struck an initial defensive posture as all ten sectors began in negative territory. However, early selling pressure eased within the first half hour of trade as an extended rally in biotechnology lifted the heavyweight health care space (+1.0%) to the top of the leaderboard. Currently, eights sectors trade in the green with health care (+1.0%), materials (+0.3%), technology (+0.3%) and energy (+0.2%) leading the upside.

The health care space (+1.0%) looks to rebound from larger yearly losses as the group shows the worst performance over that period (-5.9% year-to-date). On that note, the iShares Nasdaq Biotechnology ETF (IBB 262.49, +6.00) has extended its weekly gain to 4.8%, but remains down 20.7% for the year. Meanwhile, Eli Lilly (LLY 71.98, +1.73) is extending its own rebound as it trims its month-to-date decline to 0.9%.

On the commodities front, WTI crude tumbled as much as 1.6% ($40.84/bbl) following news that Libya will not take part in a proposed supply cut. However, the energy component has been able to move off its worst level of the day and shows a loss of 0.4% ($41.37/bbl) ahead of tonight's weekly inventory report from the American Petroleum Institute. The commodity-sensitive energy sector (+0.2%) has also shown marked resilience today as oil and gas refiners outperform.

On the bottom of the leaderboard, consumer staples (-0.4%), telecom services (-0.1%) consumer discretionary (UNCH), and financials (UNCH) lead the downside. Countercyclical consumer staples (-0.4%) underperform as Dean Foods (DF 17.13, -2.11) plunges 10.9% following commentary from Wal-Mart (WMT 68.05, +0.08), which confirmed its plans to launch a milk processing plant. Separately, tobacco names underperform the space.

The U.S. Dollar Index (95.71, 0.42) trades broadly higher as the greenback extends its gains against the yen and the euro. The dollar/yen pair trades higher by 0.2% (112.12) after bouncing off the 111.55 level. Meanwhile, the euro/dollar pair trades lower by 0.3% at 1.1208.

The yield on the 10-yr note tumbled to 1.88% (-5 bps) at the start of the session, but has gained as the rally continued in the equity market. Currently, the yield on the 10-yr note is lower by one basis point at 1.91%.

Today's economic data was limited to the FHFA Housing Price Index for January, which rose 0.5% month-over-month after increasing a revised 0.5% (from 0.4%) in December.