Day Traders Diary

9/14/16

 The stock market ended the midweek affair on a mixed note as investors favored a cautious approach ahead of a plethora of economic data and the latest policy statement from the Bank of England. The Nasdaq Composite (+0.4%) ended ahead of both the S&P 500 (-0.1%) and the Dow Jones Industrial Average (-0.2%).

Equity indices gyrated at the start of the session as investors continued to mull a recent resurgence of volatility and a downturn in crude oil futures. The energy component was under pressure as participants responded to a mixed reading of the American Petroleum Institute's weekly inventory report. The API reported that crude oil stockpiles rose by 1.4 million barrels (last: -12.0 million barrels) while gasoline inventories fell by 2.4 million barrels (last: -2.40 million barrels).

The broader market shook early weakness in the opening hour as investors looked to confirm the inventory reading with the Department of Energy's more influential stockpile data. The EIA reported that crude oil inventories declined by 0.55 million barrels (consensus: +3.80 million) after falling 14.51 million barrels in the prior week. Meanwhile, gasoline inventories increased by 0.56 million barrels (consensus: +0.34 million). WTI crude initially spiked on the news, but was unable to maintain position above the $45.00/bbl price level. Crude oil ended its day near its low, sliding 3.0% ($43.58/bbl; -$1.34).

The S&P 500 (-0.1%) moved lower with crude oil, but managed to stay in positive territory amid strength in the top-weighted technology sector (+0.4%). The benchmark index carved out a session low in the final hour of trade as seven sectors finished in the red. The consumer staples (-0.3%), financial (-0.3%), and energy (-1.2%) sectors ended at the bottom of the leaderboard while consumer discretionary (UNCH), utilities (+0.5%) and technology (+0.6%) led.

The influential technology sector (+0.6%) outperformed as Dow component Apple (AAPL 111.83, +3.88) rallied 3.6%. The name displayed relative strength as bullish pre-order data for the iPhone 7 elicited a bid for the second session in a row. The PHLX Semiconductor Index (+0.9%) also outperformed as iPhone suppliers led. Broadcom (AVGO 169.61, +4.37) and Skyworks (SWKS 72.40, +3.04) finished at the top of the index, gaining 2.6% and 4.4%, respectively.

In the health care space (-0.1%), biotechnology outperformed amid recent M&A news. Allergan (AGN 244.81, +4.71) rallied 2.0% after announcing that it would acquire Vitae Pharmaceuticals (VTAE 20.85, +12.75) for $21 per share in cash. Allergan also benefited from a bullish note from Mizuho. Conversely, McKesson (MCK 167.70, -8.14) fell 4.6% after the Department of Justice requested more information regarding the company's contribution and sale agreement with Change Healthcare.

In the financial sector (-0.3%), Wells Fargo (WFC 46.52, -0.44) erased a modest gain after reports indicated that California and New York may investigate the bank for its sales tactics. Separately, Dow component American Express (AXP 63.48, -0.88) finished at the bottom of the price-weighted index. The financial sector has declined 1.0% this week, leading only materials (-0.2%; week-to-date: -1.2%) and energy (-1.2%; week-to-date: -3.1%).

Treasuries ended higher with the short end of the curve demonstrating relative strength. The yield on the 2-yr note fell four basis points to 0.76% while the yield on the 10-yr note declined three basis points to 1.70%.

Today's participation was above the recent average as more than 878 million shares changed hands on the NYSE floor.

Today's economic data was limited to the weekly MBA Mortgage Index and Import/Export Prices for August:

The MBA Mortgage Index showed that mortgage applications increased 4.2% in the week ending September 10. This followed a 0.9% gain in the prior week.

Lower prices for agricultural and nonagricultural exports led a 0.8% decline in export prices in August while lower fuel prices paced a 0.2% decline in import prices.

Excluding agriculture, export prices declined 0.4% after increasing a revised 0.2% (from +0.3%) in July.

Excluding fuel, import prices were unchanged after increasing an unrevised 0.3% in July.

Tomorrow's economic data will include weekly initial claims (Briefing.com consensus 263k), Retail Sales for August (Briefing.com consensus -0.1%), PPI for August (Briefing.com consensus +0.1%), the Philadelphia Fed Survey for September (Briefing.com consensus 0.0), the second quarter Current Account Balance (Briefing.com consensus -$122.8 billion), and Empire Manufacturing for September (Briefing.com consensus 0.0) each crossing the wires at 8:30 ET. Separately, Industrial Production (Briefing.com consensus -0.3%) and Capacity Utilization (Briefing.com consensus 75.7%) for August will be released at 9:15 ET while Business Inventories for July (Briefing.com consensus +0.1%) will cross the wires at 10:00 ET.

Russell 2000: +6.7% YTD

S&P 500: +4.0% YTD

Dow Jones: +3.5% YTD

Nasdaq: +3.3% YTD