Day Traders Diary

3/30/16

The stock market ended the Wednesday affair on a higher note as cautious remarks from Fed Chair Yellen boosted risk appetite for the second day in a row. Additional focal points for today's trade included relative strength from the heavyweight technology (+0.7%) and financial (+0.6%) sectors, wavering oil trade, and a continued downturn in biotechnology. The Nasdaq Composite (+0.5%) in-line with the Dow Jones Industrial Average (+0.5%) and the S&P 500 (+0.4%).

Equity indices opened their day sharply above their flat lines as global bourses rallied in response to yesterday's dovish remarks from Fed Chair Yellen. Ms. Yellen's cautious tone boosted risk appetite overseas and at home as she advocated a more gradual path to interest rate normalization. Furthermore, an early rally in crude oil worked to buttress the opening move higher.

However, risk appetite waned when WTI crude slipped from its session high. The slide in oil corresponded to the release of a better than expected reading from the Department of Energy's weekly inventory report. Despite a smaller than expected build in crude stockpiles (2.30 million barrels; expected 3.30 million) and a larger than estimated draw from gasoline inventories (2.51 million barrels; expected 2.17 million), the energy component folded to selling pressure at its session high ($39.80/bbl). However, WTI crude was able to end its day in positive territory, settling up 0.2% at $32.86/bbl.

The major averages moved higher following the conclusion of oil's pit session and seven of ten sectors were able to end their day in the green. On the top of the leaderboard, the heavily-weighted technology (+0.7%) and financial (+0.6%) sectors led while consumer discretionary (+0.6%) and materials (+0.5%) followed.

In the influential technology space (+0.7%), Apple (AAPL 109.56, +1.88) extended its March gain to 12.2% after the tech giant received an upgrade to "Outperform" and a price target increase ($135) at Cowen. Elsewhere in the group, Salesforce.com (CRM 74.30, +2.00) jumped 2.8% after announcing a blank purchase agreement with various departments of the U.S. government that totaled $603 million.

Insurance names gained in the financial sector (+0.6%) after MetLife (MET 44.73, +2.27) had its "Too Big to Fail" designation removed by a district court. The company rallied 5.4% while Prudential (PRU 72.95, +1.43) and American International Group (AIG 54.52, +1.13) traded higher in sympathy with the name.

In the consumer discretionary space (+0.6%), above-consensus bottom-line results from Carnival (CCL 52.37, +2.73) helped lift the resort and leisure sub-group. Elsewhere, Amazon (AMZN 598.69, +4.83) extended its week to date advance to 2.5% while Netflix (NFLX 102.19, -1.94) fell 1.9%.

On the bottom of the leaderboard, countercyclical utilities (-0.2%), health care (-0.1%), and telecom services (UNCH) underperformed.

Biotechnology continued to weigh on the broader health care sector (-0.1%) as the iShares Nasdaq Biotechnology ETF (IBB 254.94, -1.67) slipped 0.7%. Today's decline in the broader ETF followed a leg lower for Valeant Pharmaceuticals (VRX 27.07, -1.91). The pharmaceutical company dove 6.6% after requesting another extension to file its 10-K form.

The U.S. Dollar Index (94.84, -0.32) slipped further today as the euro and the yen extended their recent gain over the greenback. The euro/dollar pair gained 0.4% and ended at 1.1334 while the dollar lost 0.2% (112.45) against the yen.

The Treasury complex fell to session lows during the height of the rally in equities and slowly marched off those levels as the major averages slipped from their highs. The yield on the 10-yr note ended its day higher by two basis points at 1.82%.

Today's participation fell beneath the recent average as fewer than 700 million shares changed hands on the NYSE floor.

Today's economic data included the weekly MBA Mortgage Index and the the ADP Employment Change for March:

The weekly MBA Mortgage Index fell 1.0% to follow last week's 3.3% drop

The ADP Employment report for March came in just ahead of expectations (200K; Briefing.com consensus 196K).

This report is a prelude to the more influential March Employment Situation report, which will be released on Friday morning (Briefing.com consensus 200K).

Tomorrow's economic data will include March's Challenger Job Cuts and weekly initial claims (Briefing.com consensus 265k), which will cross the wires at 7:30 ET and 8:30 ET, respectively. The day's data will be capped off with the 9:45 ET release of the Chicago PMI for March (Briefing.com consensus 49.9).

Nasdaq Composite -2.8% YTD

Russell 2000 -2.0% YTD

S&P 500 +1.0% YTD

Dow Jones +1.7% YTD