Day Traders Diary

3/28/16

The stock market began the week on a flat note as the S&P 500 added 0.1% while the Nasdaq Composite (-0.1%) underperformed. Today's action featured a slide in crude oil, a noteworthy revision to economic data from January, and relative strength from the consumer discretionary space (+0.5%).

Overall, the Monday affair was very quiet as post-holiday trade failed to garner much interest ahead of a data-heavy week. To that point, fewer than 688 million shares changed hands at the NYSE floor, versus last week's average of 833.8 million shares.

A cautious tone was set this morning as a tumble in oil helped drag the major averages to opening lows. Meanwhile, some mixed data readings clouded sentiment as investors weighed a cooler-than-expected reading of Core PCE Prices for February (0.1%; Briefing.com consensus +0.2%) and an above-consensus reading of February Personal Income (+0.2%; Briefing.com consensus +0.1%). The former is the Fed's preferred measure of inflation, and investors will be on the lookout for any implications this may hold for future fed funds rate hikes.

The major indices hit their highs around 14:00 ET as WTI crude ended its rally off its low. The energy component would end its pit session near those levels, ticking down 0.3% to $39.38/bbl.

Four sectors ended beneath their flat lines with energy (-0.5%), utilities (-0.4%), technology (-0.3%), and health care (-0.3%) leading to the downside. Meanwhile, consumer discretionary (+0.5%), consumer staples (+0.5%), materials (+0.4%), and financials (+0.3%) outperformed.

Lodging names outperformed in the consumer discretionary space following reports that Starwood Hotels (HOT 83.75, +1.62) received a revised non-binding offer from the Chinese consortium headed by Anbang Insurance Group. Elsewhere, Time Warner (TWX 72.54, +2.53) rallied 3.6% following the release of 'Batman v Superman: Dawn of Justice', which resulted in the third largest global opening for a March release in IMAX (IMAX 30.38, +0.20) theaters.

The top-weighted technology space (-0.3%) spent most of its day behind the benchmark index as Microsoft (MSFT 53.54, -0.67) weighed on the sector. The tech giant underperformed following headlines that it may be interested in acquiring Yahoo! (YHOO 35.23, +0.37). Meanwhile, Oracle (ORCL 40.62, -0.35) underperformed among software names while Qualcomm (QCOM 50.19, -0.67) displayed relative weakness in the PHLX Semiconductor Index (-0.1%).

The industrial sector (UNCH) finished above its flat line, as a rally in large cap General Electric (GE 31.49, +0.38) outweighed the underperformance of rail names in the Dow Jones Transportation Average (-0.9%). Elsewhere in the Transportation Average, JetBlue (JBLU 20.79, +0.55) spiked after reports indicated that the company put in a bid for Virgin American (VA 37.70, +3.53).

Biotechnology endured a choppy session as the iShare Nasdaq Biotechnology ETF (IBB 252.08) swung from a 1.5% loss to a 0.9% gain. The ETF ended its day down 1.3% despite strength from constituent Gilead Science (GILD 92.46, +1.14). The biotech name ended higher by 1.6% after a ruling in a patent dispute case was deemed better than feared.

The U.S. Dollar Index (95.97, -0.20) finished lower as the greenback lost ground to the euro. The euro/dollar pair ended higher by 0.3% at 1.1200. For its part, the dollar gained 0.2% against the yen to end at 113.38.

Treasuries ended in the green, but off their best levels. The yield on the 10-yr note settled lower by three basis points at 1.88% (-1 bps) after dipping into the 1.86% area.

Today's economic data included PCE Prices for February, Personal Income for February, Personal Spending for February, and Pending Home Sales for February:

The Personal Income and Spending report for February was released to little fanfare as the report came in right around expectations. Income increased 0.2% month-over-month (Briefing.com consensus +0.1%), spending increased 0.1% (Briefing.com consensus +0.1%), and the core PCE Price Index, which excludes food and energy, increased 0.1% (Briefing.com consensus +0.2%).

Overall, this set of figures is not expected to do much in terms of strengthening or weakening a rate-hike argument, but it is worth noting that a 0.5% increase in January Personal Spending was revised down to an increase of just 0.1% in today's report.

The Federal Reserve is looking for 2.0% year-over-year inflation as expressed by the core PCE Index. Following today's report, the index remains unchanged at 1.7% year-over-year.

The personal savings rate edged up to 5.4% from 5.3%.

Pending home sales for February climbed 3.5% while the Briefing.com consensus expected an increase of 1.1%. Meanwhile, the January reading was revised to -3.0% from -2.5%.

Tomorrow's economic data will include the Case-Shiller 20-city Index for March (Briefing.com consensus +5.7%) and Consumer Confidence for March (Briefing.com consensus 94.5), which will be released at 9:00 ET and 10:00 ET, respectively.

Separately, Fed Chair Janet Yellen will speak at the Economic Club of New York at 12:20 ET.