Day Traders Diary

8/15/16

 The stock market began the week on a higher note as the Nasdaq Composite (+0.6%), the Dow Jones Industrial Average (+0.3%), and the S&P 500 (+0.3%) each carved out new all-time closing highs. The benchmark index traversed a narrow seven-point trading range as a rally in crude oil buoyed the broader market. Today's trade also featured weakening in the dollar and the outperformance of the heavily-weighted technology (+0.5%), financial (+0.6%), and industrial (+0.6%) sectors.

U.S. equities began the day on a higher note, shrugging off negative economic data at home and from overseas. Japan's second-quarter GDP disappointed with growth coming in flat quarter-over-quarter (expected: 0.2%). However, the response was fairly muted as participants mulled recent fiscal stimulus measures and looked forward to potential action from the Bank of Japan. Central bank policy remained in focus as investors ruminated over a disappointing reading of the U.S. Empire Manufacturing Survey for August (-4.2; Briefing.com consensus 4.0). Investors added the disappointing reading to the recent string of soft data, which might keep policy rate normalization on hold.

The broader market advanced through the afternoon, trading higher alongside crude oil. The energy component benefited from speculation regarding potential price stabilization measures from OPEC and non-OPEC members. Reports indicated that Russia is holding discussions regarding such measures with producers inside and outside of the oil cartel. WTI crude ended its day higher by 2.9% ($45.73/bbl; +$1.27), extending its month-to-date advance to 10.0%.

The S&P 500 (+0.3%) settled off its high after the benchmark index failed to clear technical resistance near the 2191/2193 price level. Despite the minor pullback, seven sectors ended in the green with commodity-sensitive energy (+0.6%) and materials (+1.0%) outperforming. The remaining advancers ended with gains between 0.1% (health care) and 0.6% (industrials). Conversely, defensively-oriented consumer staples (-0.2%), telecom services (-0.3%), and utilities (-1.6%) ended with the only losses.

The Dow Jones Transportation Average (+0.6%) finished ahead of the broader market as airlines outperformed in the index. United Continental (UAL 48.01, +0.91) and American Airlines (AAL 35.87, +0.95) ended higher by 1.9% and 2.7%. Meanwhile, the broader U.S. Global Jets ETF (JETS 22.51, +0.27) trimmed its monthly loss to 0.1%. In the broader industrial sector (+0.6%), Dow component Boeing (BA 134.66, +1.59) outperformed, gaining 1.2%.

The economically-sensitive financial sector (+0.6%) displayed relative strength as the group moved higher with rising Treasury yields. Treasuries ended the day near their lows as yields rose through the curve. The yield on the benchmark 10-yr note settled higher by four basis points at 1.56%. In the group, investment brokerages and life insurance names displayed relative strength as Morgan Stanley (MS 29.66, +0.49) finished higher by 1.7%.

In the technology sector (+0.7%), top-weighted Apple (AAPL 109.51, +1.33) outperformed, bolstering the broader sector. The stock has rallied 13.3% since beating bottom-line estimates for the quarter on June 26. Twitter (TWTR 20.86, +1.32) jumped 6.8% on reports indicating that the company is in talks to have its app supported by Apple TV. On the flipside, Salesforce.com (CRM 78.92, -2.71) slipped 3.3% after announcing that it would postpone its earnings call until August 31 (from August 29).

The U.S. Dollar Index (95.60, -0.12) finished off its low as the greenback held losses against the euro and commodity currencies. The single currency gained 0.2% against the buck (1.1186) while the dollar/Canadian dollar pair ended lower by 0.3% (1.2918). Separately, the dollar was unchanged against the safe-haven yen (101.23).

Today's participation was below the recent average as fewer than 723 million shares changed hands at the NYSE floor.

Today's economic data included the Empire Manufacturing Survey for August and the NAHB Housing Market Index for August:

The Empire Manufacturing Survey for August registered in at -4.21, which was below the prior month's reading of 0.55. The Briefing.com consensus estimate was pegged at 4.0.

The NAHB Housing Market Index for August came in at 60 from a revised 58 in July (from 59) while the Briefing.com consensus expected the reading to come in at 59.0.

Tomorrow's economic data will include July CPI (Briefing.com consensus 0.0%), July Housing Starts (Briefing.com consensus 1,167k), and July Building Permits (Briefing.com consensus 1,153k), which will each be released at 8:30 ET. The July Industrial Production Report (Briefing.com consensus 0.3%) and July Capacity Utilization (Briefing.com consensus 75.7%) will both cross the wires at 9:15 ET.