Day Traders Diary

8/8/16

 The stock market began the week on a quiet note as the Nasdaq Composite (-0.2%) settled behind the S&P 500 (-0.1%) and the Dow Jones Industrial Average (-0.1%). The benchmark index meandered in an eight-point trading range as a rally in crude oil helped counter weakness from the heavyweight consumer discretionary (-0.3%) and health care (-0.9%) sectors.

U.S. equities began the day on a modestly higher note, responding to a positive bias in global bourses. Asia-Pacific indices outperformed as participants reacted to Friday's above-consensus reading of the U.S. Employment Situation Report for July. The employment data showed continued improvement to the hiring landscape as nonfarm payrolls (255K; Briefing.com consensus 185K) handily beat estimates for the second consecutive month. Conversely, there was no negative response to China's disappointing Trade Balance Report after the People's Bank of China suggested potential "innovative" stimulus measures.

The major averages pulled back through the opening hour as the heavyweight technology (UNCH), consumer discretionary (-0.3%), and health care (-0.9%) sectors weighed on the broader market. The move to the downside was limited though, as investors eyed a rebound in crude oil. WTI crude rallied 3.0% ($43.07/bbl; +$1.24) amid reports that several members of OPEC are attempting to revitalize a production freeze agreement. The energy component extended its August gain to 3.6%.

The benchmark index carved out a session low in the afternoon (2177.85), but recovered in the final hour to end just below its flat line. Seven sectors ended in the red with heavily-weighted industrials (UNCH) and technology (UNCH) showing the slimmest losses. On the flipside, financials (+0.1%), materials (+0.2%), and energy (+1.2%) outperformed.

The countercyclical health care sector (-0.9%) ended at the bottom of the leaderboard as pharmaceutical names weighed. In the group, Bristol-Myers (BMY 60.30, -2.98) extended its two-session losing streak to 19.9%. The company came under pressure last Friday after announcing that its Opdivo medication failed to meet its primary endpoints. Biotechnology also underperformed after Allergan (AGN 248.31, -5.54) reported mixed quarterly results and updated its outlook to reflect the sale of the Actavis Generics division to Teva Pharmaceuticals (TEVA 53.30, -0.91).

Influential Netflix (NFLX 95.11, -1.92) weighed on the consumer discretionary space (-0.3%) after reports indicated that Alibaba (BABA 85.00, +0.41) is not seeking to invest in the company. Separately, Chinese streaming service Leeco announced that it is looking to add additional U.S. employees. Amazon (AMZN 766.56, +0.58) finished flat after Wal-Mart (WMT 73.34, -0.42) agreed to purchase Amazon competitor Jet.com. Wal-Mart agreed to pay $3 billion in cash for the company. Elsewhere, on the M&A front, Mattress Firm (MFRM 63.75, +34.01) spiked after Steinhoff offered to acquire the company for $64 per share.

The PHLX Semiconductor Index (-0.2%) ended behind the broader technology sector (UNCH) as Qorvo (QRVO 54.30, -0.75) continued to underperform. The name has been under pressure after reporting its quarterly results on August 2. Separately, ON Semiconductor (ON 10.11, +0.12) ended higher by 1.2% after beating analysts' estimates for the quarter and offering in-line guidance for the third quarter.

The U.S. Dollar Index (96.39, +0.19) settled modestly higher as the greenback gained ground against the pound and yen. Sterling lost 0.2% against the buck (1.3042) while the dollar/yen pair ended the day higher by 0.6% (102.44). Elsewhere, the dollar lost 0.1% against the commodity-sensitive Canadian dollar (1.3165).

Treasuries ended a quiet session on a flat note as the yield on the benchmark 10-yr note finished flat at 1.59%.

Participation was below the recent average as fewer than 773 million shares changed hands on the NYSE floor.

There was no economic data of note released today.

Tomorrow's economic data will include the preliminary estimate of second quarter Productivity (Briefing.com consensus 0.5%) and Unit Labor Costs (Briefing.com consensus 1.7%), which will cross the wires at 8:30 ET. Separately, Wholesale Inventories for June (Briefing.com consensus +0.2%) will be released at 10:00 ET.

Russell 2000 +8.3% YTD

S&P 500 +6.7% YTD

Dow Jones +6.3% YTD

Nasdaq Composite +4.1% YTD