Day Traders Diary


The major averages ended Thursday's session with some fight, but ultimately closed the day mixed and with modest changes.  The Nasdaq (+0.4%) outperformed on the back of Facebook's (FB 125.00, +1.66) glowing earnings report and some dealmaking that included Oracle (ORCL 41.19, +0.26) acquiring NetSuite (N 108.41, +16.84) for $9.3 billion in cash.
Overall, there was an air of hesitation in the air ahead of some key happenings, including earnings reports from (AMZN 752.61, +15.94) and Alphabet (GOOG 745.91, +4.14) after Thursday's close, a policy decision from the Bank of Japan, and the stress test results from the European Banking Authority on Friday.
Other limiting factors included the continued slide in oil prices, underlying frustration with the Fed's uncertain policy outlook, a cautious-sounding outlook from Ford (F 12.71, -1.13), and a nagging sense the market may be due for a consolidation phase after its strong run off the June 27 post-Brexit low.  Even so, sellers didn't show a lot of conviction today as the market continued to exhibit an inclination to buy on dips versus selling on strength.
Equities began the day on a choppy note, responding to a plethora of quarterly earnings reports and yesterday's policy statement from the Federal Open Market Committee. The Fed voted to maintain its key policy rate, but left its larger policy intentions open ended.
On the earnings front, technology (+0.4%) heavyweight Facebook blew past analysts' estimates for the quarter while Ford disappointed investors with its bottom-line result and a warning regarding its full-year outlook.
The major averages went on the defensive in early action, weighed down by a retreat in oil futures. WTI crude fell from the $42.00/bbl price level at the start of the session and slipped to the $41.10/bbl area shortly before midday.
The S&P 500 retreated to the 2160 area where it found support and clawed its way back from there before seeing a slight dip into the close.
The heavily-weighted financial (+0.2%) and technology (+0.2%) sectors helped lead the afternoon reversal. Six sectors ended above the flat line, with the consumer staples sector (+0.5%) logging the biggest advance. The telecom services (-0.7%), energy (-0.2%), materials (-0.1%), and health care (-0.04%) sectors ended in negative territory.
The relative strength in the consumer staples sector was fueled by Anheuser-Busch InBev (BUD 125.92, +3.98), which rallied 3.3% ahead of tomorrow morning's earning release. The stock also benefited from reports that indicated that major shareholders of SABMiller PLC (SBMRY 57.55, +1.30) approve of Anheuser-Busch InBev's revised takeover offer for the company. Separately, Molson Coors Brewing (TAP 97.75, +4.62) gained 5.0% as its stands to acquire SABMiller PLC's interest in MillerCoors in the transaction.
In the consumer discretionary space, outperformed ahead of this evening's earnings report. Elsewhere, Dow component Home Depot (HD 137.96, +1.65) topped the price-weighted index while automakers underperformed alongside Ford.
The U.S. Dollar Index (96.69, -0.36) ended modestly lower as the euro and the commodity-currencies gained ground against the buck. The euro/dollar pair finished higher by 0.2% (1.1077) while the greenback lost 0.2% against the Canadian dollar (1.3158). The dollar/yen pair finished flat (105.40) ahead of tomorrow's policy statement from the Bank of Japan.
Treasuries finished on a mixed note.  The short-end of the Treasury curve saw some modest buying interest while the long end lagged. The yield on the 10-yr note finished higher by one basis point at 1.50%.
Today's trading volume was in-line with the recent average as more than 853 million shares changed hands on the NYSE floor
Today's economic data included weekly initial claims and International Trade in Goods for June:
•Initial claims for the week ending July 23 increased by 14,000 to 266,000 ( consensus 260,000).◦Overall, there is nothing in this report that will make the market anxious about a weakening in labor market conditions.
◦There were no special factors influencing the claims reading, which remained below 300,000 for the 73rd straight week.
◦The four-week moving average for initial claims dropped by 1,000 to 256,500.
•Continuing claims for the week ending July 16 were 2.139 million, up 7,000 from the prior week.◦The four-week moving average for continuing claims decreased by 7,000 to 2.135 million, which is the lowest average since November 11, 2000.
•June International Trade in Goods showed a deficit of $63.30 billion, compared to the May deficit of $60.59 billion.
Tomorrow's economic data will include the advance estimate for Q2 GDP ( consensus +2.6%), which will cross the wires at 8:30 ET. The Chicago PMI for July ( consensus 54.0) and the final reading of the University of Michigan Consumer Sentiment Survey for July ( consensus 90.0) will be released at 9:45 ET and 10:00 ET, respectively.
•Russell 2000 +7.3% YTD
•S&P 500 +6.2 % YTD
•Dow Jones +5.9 % YTD
•Nasdaq +3.0% YTD

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