Day Traders Diary

8/23/16

The stock market ended a relatively quiet session on a slightly higher note as an above-consensus reading of the New Home Sales Report for July and better-than-expected earnings results from the retail sub-group bolstered the broader market. The Nasdaq Composite finished higher by 0.3%, narrowly missing a new all-time closing high (previous: 5262.02). The S&P 500 settled behind the tech-heavy index, adding 0.2%.

Equity indices jumped at the start of the session as a strong performance from European bourses and a better-than-expected quarterly report from Best Buy (BBY 39.23, +6.43) bolstered the broader market. The benchmark index tested resistance near the 2193/210 area, but was unable to clear that price level despite a stronger-than-expected reading of new home sales for July.

The report showed that new home sales increased 12.4% month-over-month to a seasonally adjusted rate of 654,000 (Briefing.com consensus 580,000). The report added to recent upbeat housing data, but may have also elicited some fears regarding a sooner-than-expected rate hike. 

The S&P 500 (+0.2%) found support at the 2185/2188 price level as eight sectors finished in positive territory. The consumer discretionary (+0.5%) and materials (+0.8%) sectors ended atop the leaderboard while technology (+0.4%) and energy (+0.4%) followed. Conversely, countercyclical consumer staples (-0.1%) and utilities (-0.5%) ended in the red.

Retail names outperformed in the consumer discretionary sector (+0.5%), evidenced by the 1.0% gain in the SPDR S&P Retail ETF (XRT 46.16, +0.46). The group drafted higher following positive quarterly results and guidance from Best Buy (BBY 39.23, +6.43). Separately, Toll Brothers (TOL 31.91, +2.58) rallied 8.8% after beating revenue estimates for the quarter and narrowing its full-year guidance. The homebuilder also benefited from the positive New Home Sales Report. The broader iShares Dow Jones US Home Construction ETF (ITB 29.49, +0.75) settled higher by 2.6%.

The commodity-sensitive energy space (+0.4%) gained alongside crude oil futures. The energy component shrugged off opening hour weakness after reports indicated that Iran could be more willing to participate in potential OPEC actions to stabilize the oil market. The news was probably taken with a grain of salt, but still led to a good deal of short covering. WTI crude ended its day higher by 1.5% ($48.15/bbl; +$0.73).

The technology sector (+0.4%) displayed relative strength as software companies and networking names outperformed. Dow component Cisco Systems (CSCO 30.98, +0.35) rebounded 1.1% after sliding 1.1% last week. The PHLX Semiconductor Index (+0.5%) finished slightly ahead of the broader sector as Applied Materials (AMAT 29.95, +0.90) outperformed. The stock is up 8.2% since the company reported better-than-expected bottom-line results and upbeat fourth-quarter guidance on August 18.

Treasuries ended on a flat note with yields relatively unchanged throughout the complex. The yield on the 10-yr note finished flat at 1.54%.

Today's participation was below the recent average as fewer than 716 million shares changed hands at the NYSE floor.

Today's economic data was limited to the New Home Sales Report for July: 

• New home sales increased 12.4% month-over-month in July to a seasonally adjusted annual rate of 654,000, which was well above the Briefing.com consensus estimate of 580,000 and up 31.3% from the same period a year ago
  • July 2016 marked the strongest pace of new home sales since October 2007

For more details on this economic release, be sure to visit Briefing.com's Economic Calendar page.

Tomorrow's economic data will include the weekly MBA Mortgage Index and the FHFA Housing Price Index for June, which will be released at 7:00 ET and 9:00 ET, respectively. The day's data will be capped off with the Existing Home Sales Report for July (Briefing.com consensus 5.54 million), crossing the wires at 10:00 ET. 

• Russell 2000 +10.0% YTD
• S&P 500 +7.0% YTD
• Dow Jones +6.5% YTD
• Nasdaq Composite +5.1% YTD