Day Traders Diary

8/8/16

The stock market is little changed at midday with the Nasdaq Composite (-0.2%) trading slightly behind the S&P 500 (-0.1%). The benchmark index notched a new all-time intraday high (2185.54) at the start of the session, but the index has slipped from that level in the first half of trade. Today's flat performance follows Friday's positive employment reading and a mixed set of economic data from overseas. Other contributing factors impacting today's trade include a leg higher in oil and weakness from the heavily-weighted technology (-0.2%), consumer discretionary (-0.3%), and health care (-0.9%) sectors.

Global markets tilted to the upside overnight as investors responded to Friday's stronger-than-expected reading of the Employment Situation Report for July. The report reduced concerns regarding the U.S. employment picture, indicating that headline nonfarm payrolls (255K; Briefing.com consensus 185K) increased faster-than-expected. The report also showed positive strides in average hourly earnings (+0.3%; Briefing.com consensus +0.2%). On the flipside, China's Trade Balance Report for July disappointed with imports (-12.5%; consensus -7.0%) and exports (-4.4%; consensus -3.0%) contracting more than expected.

The major averages carved out lows in the opening hour of trade with heavily-weighted technology (-0.2%), consumer discretionary (-0.3%), and health care (-0.9%) each dragging down the broader market. However, a continued rebound in crude oil futures has offered support to equities. The energy component has rallied 3.1% ($43.10/bbl; +$1.30) after reports indicated that several members of OPEC are looking to revisit a potential production freeze agreement. The S&P 500 (-0.1%) continues to maintain its footing near the 2180 price level as five sectors trade in the green with financials (+0.2%), materials (+0.2%), and energy (+1.5%) outperforming.

The health care sector (-0.9%) leads to the downside as pharmaceutical names and biotechnology underperform. Dow component Merck (MRK 62.81, -1.02) displays relative weakness, trimming Friday's 10.4% gain. The pharmaceutical giant rallied at the end of last week when Bristol-Myers (BMY 60.32, -2.96) announced that its Opdivo medication failed to meet its primary endpoints. Biotechnology also underperforms as Allergan (AGN 247.16, -6.69) weighs. The company reported mixed quarterly results and updated its outlook.

In the consumer discretionary space (-0.3%), Amazon (AMZN 763.72, -2.25) underperforms after Wal-Mart (WMT 73.16, -0.60) agreed to purchase Amazon competitor Jet.com. Wal-Mart agreed to pay $3 billion in cash for the company. Influential Netflix (NFLX 94.88, -2.15) also displays relative weakness after Alibaba (BABA 84.94, +0.35) denied reports that it is seeking to invest in the company. Additionally, Chinese streaming service Leeco also announced that it is looking to add additional U.S. employees.

The Dow Jones Transportation Average (+0.2%) trades ahead of the benchmark index as rail names outperform. In the sub-group, Norfolk Southern (NSC 89.59, +0.71) leads, gaining 0.9%. Separately, Avis Budget (CAR 38.85, +0.49) has extended its post-earnings rally, jumping 11.8% since reporting mixed results and raising its outlook on August 3.

The U.S. Dollar Index (96.43, +0.24) trades near its best level as the greenback gains against the euro, pound, and yen. The single currency has lost 0.1% against the dollar (1.1077) while the dollar has jumped 0.8% against the safe-haven yen (102.57). Separately, the dollar/Canadian dollar pair trades lower by 0.1% (1.3157).

Treasuries trade on a higher note as yields slips across the curve. The yield on the 10-yr note has slipped one basis point to 1.58%.

There was no economic data of note released today.