Day Traders Diary

9/7/16

The stock market ended a quiet midweek session on a flat note as participants employed some caution ahead of tomorrow's policy statement from the European Central Bank. The tech-heavy Nasdaq (+0.2%) settled slightly ahead of the S&P 500 (UNCH) and the Dow Jones Industrial Average (-0.1%).

The major averages rose at the start of the session, responding to a positive bias in European markets. Regional bourses ended in the green as investors examined a mixed set of economic data ahead of tomorrow's policy decision from the ECB. The central bank is scheduled to release its September rate decision at 7:45 ET while ECB President Draghi is scheduled to offer remarks at 8:30 ET.

Equity indices pulled back after the first hour as some strengthening in the U.S. Dollar Index (94.97, +0.15, +0.16%) weighed on dollar-denominated oil and the broader market. The greenback benefited from some softening in sterling, following accommodative remarks from Bank of England Governor Mark Carney. Mr. Carney addressed parliament today, indicating that post-Brexit recession risks have receded. However, the BoE governor went on to note that the central bank has further room to maneuver monetary policy, if needed.

The benchmark index found support near its 20-day simple moving average (2180.21), climbing off that level for the remainder of the session. Six sectors ended in the green with technology (+0.2%), telecom services (+0.2%), and energy (+0.3%) outperforming. Conversely, materials (-0.1%), health care (-0.1%), and consumer staples (-0.9%) led to the downside.

The influential technology sector (+0.2%) finished ahead of the broader market as top-weighted Apple (AAPL 108.38, +0.68) outperformed. The Dow component jumped 0.6% after unveiling the iPhone 7 and a new iteration of the Apple Watch. Meanwhile, fellow heavyweight Facebook (FB 131.05, +1.32) rose 1.0% after Morgan Stanley issued some bullish commentary on the name. Conversely, the high-beta chipmakers underperformed, evidenced by the 0.7% decline in the PHLX Semiconductor Index.

In the energy sector (+0.3%), refining names outperformed ahead of this evening's inventory report from the American Petroleum Institute. Phillips 66 (PSX 79.59, +0.48) and Valero Energy (VLO 56.09, +0.82) ended higher by 0.6% and 1.5%, respectively. The Department of Energy's more influential inventory report will be released tomorrow morning at 11:00 a.m. ET. For its part, WTI crude ended its pit session higher by 1.4% ($45.48/bbl; +$0.63).

Biotechnology led in the health care space (-0.1%) as the iShares Nasdaq Biotechnology ETF (IBB 286.10, +2.01) ended higher by 0.7%. In the ETF, Gilead Sciences (GILD 78.22, +0.34) outperformed after noting that it continues to examine potential M&A options, but would prefer to partner with a more mature company with a revenue stream. Meanwhile, Valeant Pharmaceuticals (VRX 30.27, +0.80) and Progenics Pharmaceuticals (PGNX 6.34, +0.18) gained after the two unveiled the first FDA approved Relistor tablets for commercial sale in the United States.

In the consumer staples space (-0.9%), grocery store names weighed as the sub-group moved lower in sympathy with Sprouts Farmers Market (SFM 19.68, -3.13). The stock was under pressure after cutting its third-quarter and full-year guidance. Kroger (KR 31.32, -1.35) and Whole Foods (WFM 29.08, -1.62) fell in sympathy with the name, declining 4.1% and 5.3%, respectively.

Treasuries ended on a flat note with yields little changed through the curve. The yield on the 2-yr note ended flat (0.73%) while the yield on the 10-yr note settled lower by one basis point (1.53%).

Today's participation was below the recent average as fewer than 803 million shares changed hands on the NYSE floor.

Today's economic data included the weekly MBA Mortgage Index and the July Job Openings and Labor Turnover Survey:

The MBA Mortgage Index showed that mortgage applications increased 0.9% in the week ending September 3. This followed a 2.8% gain in the prior week.

The July Job Openings and Labor Turnover Survey showed that job openings came in at 5.871 million from a revised 5.643 million (from 5.624 million) in June.

Tomorrow's economic data will include weekly initial claims (Briefing.com consensus 265k) and Consumer Credit for July (Briefing.com consensus $16.0 billion), which will cross the wires at 8:30 ET and 15:00 ET, respectively.

Russell 2000: +11.0% YTD

S&P 500: +7.0% YTD

Dow Jones: +6.3% YTD

Nasdaq Composite: +5.5% YTD