Day Traders Diary

4/11/16

The stock market began the week on a lower note as the major averages sunk into negative territory in a final-hour sell off. Today's action featured an uptick in crude oil, positive sentiment from overseas, and the underperformance of the heavily-weighted health care (-0.7%) space. Today also marks the beginning of the first quarter earnings reporting period with Alcoa (AA 9.74, +0.37) kicking things off after the close. The Nasdaq Composite (-0.4%) ended its day behind the S&P 500 (-0.3%) and the Dow Jones Industrial Average (-0.1%).

The equity market gapped up to begin its day as more news regarding Italy's planned bad-bank fund boosted investor sentiment. The fund is aimed at limiting a possible contagion effect from bad loans originated by Italian banks and is expected to improve balance sheets of those banks. Separately, an extended rally in crude oil added support to the opening move higher.

However, the major averages pulled back from their opening highs as health care (-0.7%) slipped beneath its flat line and the remaining gainers pared earlier gains. Additionally, despite an uptick in WTI crude, the commodity-sensitive energy space (-0.1%) was unable to end above its flat line.

By the end of the day, eight sectors were in the red with health care (-0.7%), consumer staples (-0.7%), and telecom services (-0.6%) rounding out the leaderboard. Conversely, materials (+0.5%), and financials (+0.3%) finished with the only gains.

In the economically-sensitive financial sector (+0.3%), money center banks outperformed ahead of key earnings reports from JPMorgan Chase (JPM 58.20, +0.46), Bank of America (BAC 12.97, +0.09), and Citigroup (C 41.12., +0.65). The three are scheduled to report earnings on Wednesday, Thursday, and Friday, respectively. Separately, Goldman Sachs (GS 152.20, +1.92) gained 1.3% after the Attorney General of New York announced a $5 billion settlement with the company for deceptive practices leading up to the financial crisis.

The energy sector (-0.4%) ended its day on a lower note as WTI crude gained 1.8% ($40.47/bbl). In the space, Baker Hughes (BHI 41.74, -1.37) ended its day lower by 3.2% after Barron's issued cautious commentary on the company. Conversely, Chesapeake Energy (CHK 4.50, +0.74) gained 19.7% after having its borrowing base reaffirmed at $4 billion. The company also increased collateral under its loan amendment.

Biotechnology underperformed in the health care space (-0.7%), evidenced by the 1.7% decline in the iShares Nasdaq Biotechnology ETF (IBB 272.70, -4.65). The space pulled back along with Regeneron Pharmaceuticals (REGN 396.14, -8.80) and Valeant Pharmaceuticals (VRX 31.35, -2.32) as the two names ended with respective losses of 2.2% and 6.9%.

The U.S. Dollar Index (93.98, -0.25) ended its day lower, but managed to tick off its worst level of the day. The dollar lost 0.2% against the yen and finished at 107.91. Meanwhile, the euro/dollar pair finished at 1.1408 (+0.1%).

The Treasury complex ended its day on a flat note with the yield on the 10-yr note finishing at 1.72%.

Today's participation was above the recent average as more than 888 million shares changed hands on the NYSE floor.

There was no economic data of note released today.

Tomorrow's economic data will include Import and Export Prices for March and the Treasury Budget for March, which will be released at 8:30 ET and 14:00 ET, respectively.

Russell 2000 -3.6% YTD

Nasdaq Composite -3.5% YTD

S&P 500 -0.1% YTD

Dow Jones +0.8% YTD