Day Traders Diary

5/9/16

The stock market began its week on a flat note as a rebound in the heavyweight health care (+1.1%) sector compensated for a downturn from the oil pit. Additional focal points for today's trade included strengthening in the dollar, weakness in commodities, and the outperformance of the heavy-weighted consumer discretionary space (+0.3%). The Nasdaq Composite (+0.3%) ended ahead of the S&P 500 (+0.1%) and the Dow Jones Industrial Average (+0.1%).

The major averages slipped from their opening levels as investors focused their attention on a persistent downturn in crude oil. The energy component abandoned its early gains as participants weighed a four-month rally in oil against the impact of an ongoing wildfire in Canada's oil-sands region. Early estimates project that the fire near Fort McMurray will result in production losses between 645,000 and one million barrels per day. However, the energy component has already rallied 66.2% since its closing low of $26.14/bbl on February 11.

To be fair though, dollar-denominated gold (-2.1%; 1,226.80/ozt), iron ore (-6.3%; $54.65/mt), and copper (-2.3%; 2.10/lb) also ended the day lower as they each felt pressure from an uptick in the greenback and below-consensus data out of China. Over the weekend, April import (-10.9% year-over-year; expected -5.0%) and export (-1.8%; consensus -0.1%) data from China came in below consensus while commentary from a high-ranking official called into question further stimulus measures from the government.

Equity indices ticked off their session lows in the early afternoon as the heavily-weighted health care (+1.1%) and consumer discretionary (+0.3%) spaces extended their gains. The two finished near the top of the leaderboard along with countercyclical consumer staples (+0.6%) and utilities (+0.5%). Conversely, commodity-sensitive energy (-1.2%) and materials (-1.3%) rounded out the board.

In the health care sector (+1.1%), generic drug names outperformed as they rebounded from losses registered in the wake of disappointing guidance from Endo International (ENDP 15.27, -0.90). On that note, Allergan (AGN 213.71, +12.06) gained 6.0% today after declining 4.1% last Friday. The company is scheduled to deliver its quarterly report tomorrow morning. Elsewhere, biotechnology outperformed, evidenced by the 2.6% gain in the iShares Nasdaq Biotechnology ETF (IBB 261.90, +6.62).

The SPDR S&P Retail ETF (XRT 43.73, +0.70) outperformed in the consumer discretionary space (+0.3%) as retail names rebounded from a selloff following last week's disappointing same-store sales readings. Elsewhere, Chipotle Mexican Grill (CMG 453.17, +19.36) gained 4.5%, closing above last week's high ($447.46). On the flipside, JD.com (JD 23.41 ,-1.78) fell 7.1% after sales volume declined alongside growth concerns in China.

In the energy space (-1.2%) oil and gas service names underperformed with Halliburton (HAL 38.69, -0.75) and Schlumberger (SLB 72.77, -2.35) declining 1.9% and 3.1%, respectively. The broader energy sector extended its May decline to 4.2%, compared to a loss of 0.3% in the benchmark index.

The U.S. Dollar Index (94.14, +0.25) ended higher as the greenback gained against the yen and euro. The dollar/yen pair finished higher by 1.2% (108.38) after commentary from Japanese Finance Minister Taro Aso alluded to intervention in the foreign exchange market if the yen poses a continuing risk to trade or the country's broader economy. Separately, the euro lost 0.2% against the dollar (1.1383).

The Treasury complex ended its day higher with the yield on the 10-yr note slipping three basis points to 1.75%.

Today's trading volume was above the recent average as more than 941 million shares changed hands on the NYSE floor.

Investors did not receive any noteworthy economic data today.

Tomorrow's economic data will include the March Job Openings and Labor Turnover Survey and Wholesale Inventories for March (Briefing.com consensus +0.2%), which will both cross the wires at 10:00 ET.

Nasdaq Composite -5.1% YTD

Russell 2000 -1.5% YTD

S&P 500 +0.7% YTD

Dow Jones +1.6% YTD