Day Traders Diary

5/6/16

[BRIEFING.COM] The stock market ended a downbeat week on a higher note as investors digested a below-consensus reading of the Employment Situation Report. The S&P 500 gained 0.3%, trimming its weekly loss to 0.4%. Additional factors that impacted today's trade included a rebound in oil, an upswing in the dollar, and leadership from the heavily-weighted industrial (+0.7%), technology (+0.7%), and consumer discretionary (+0.7%) sectors. The Dow Jones Industrial Average (+0.5%) finished ahead of the Nasdaq Composite (+0.4%) and the benchmark index (+0.3%).

Today's session began on a lower note as investors digested the newly released Employment Situation Report for April. The headline nonfarm payrolls reading (160K, Briefing.com consensus 207K) came in below consensus while average hourly earnings ticked higher by 0.3% (Briefing.com consensus +0.3%). The report painted a conflicting picture of employment and simultaneously added to the recent string of weaker-than-expected economic data.

Furthermore, the employment data clouded investors' perception of the path of the feds funds rate. On one hand, the report showed softening in the labor market, and on the other, the report bumped the year-over-year increase in average hourly earnings to 2.5%. The fed funds futures market dropped the probability of a rate hike at the June meeting down to 6.0% before bidding it back to the previous day's probability of 13.1% by the end of the session.

The major averages ticked off their session lows in the late morning as a rebound in oil helped rally the broader market. For its part, WTI crude ended its day higher by 0.6% at $44.59/bbl. Equities extended their rally through the afternoon as heavily-weighted industrials (+0.7%), technology (+0.7%), and consumer discretionary (+0.7%) climbed the leaderboard.

By the end of the session, seven sectors were above their flat lines as materials (+0.9%), industrials (+0.7%), technology (+0.7%), and consumer discretionary (+0.7%) led. On the flipside, utilities (-0.7%), health care (-0.6%), and energy (-0.2%) rounded out the leaderboard.

The industrial sector (+0.7%) demonstrated relative strength as the Dow Jones Transportation Averages (+0.9%) trimmed its weekly decline to 1.7%. In the group, logistics companies outperformed with Expeditors International (EXPD 48.40, +0.93) and C.H. Robinson (CHRW 72.82, +1.97) gaining 2.0% and 2.8%, respectively.

In the technology sector (+0.7%), Cognizant Technology (CTSH 60.55, +2.96) gained 5.1% reporting above-consensus bottom-line results for the first quarter. Elsewhere, large cap names Facebook (FB 119.49, +1.68) and Alphabet (GOOG 711.12) gained 1.4% apiece while Apple (AAPL 92.72, -0.52) continued to see pressure. The name declined 1.1% on a weekly basis.

The heavyweight consumer discretionary sector (+0.7%) outperformed as Amazon (AMZN 673.95, +14.86) erased an early loss to finish its day higher by 2.3%. The broader sector ended its week with a gain of 0.1%, trailing only utilities (-0.7%; week-to-date +0.8%) and consumer staples (+0.5%; week-to-date +1.7%) over that period.

On the flipside, health care (-0.6%) underperformed throughout the day as biotechnology weighed. Additionally, generic drug names underperformed after Endo International (ENDP 16.17, -10.42) lowered its full-year guidance below consensus.

The U.S. Dollar Index (93.82, +0.04) rebounded throughout the day as the greenback made up ground against the euro and the yen. The euro/dollar pair finished flat at 1.1405 while the dollar lost 0.2% against the yen (107.10).

The Treasury complex ended its day on a lower note with the yield on the 10-yr note dropping three basis points to 1.78%. This compares to last Friday's settlement at 1.83%.

Today's participation was above average as more than 945 million shares changed hands on the NYSE floor.

Nasdaq Composite -5.4% YTD

Russell 2000 -2.0% YTD

S&P 500 +0.7% YTD

Dow Jones +1.8% YTD