Day Traders Diary

9/26/16

The major averages began the week on a lower note as a downturn in the heavily-weighted financial sector (-1.5%) pressured the broader market. Participants also looked to move to the sidelines ahead of an oil producers meeting and the first U.S. presidential debate. The Dow Jones Industrial Average (-0.9%) finished in-line with both the Nasdaq Composite (-0.9%) and the S&P 500 (-0.9%).

The major averages began the day under pressure as European indices led to the downside. Deutsche Bank (DB 11.85, -0.90) weighed on financial names after German Chancellor Angela Merkel indicated that the bank would not be eligible for state aid in the event of a capital shortfall. Recall that the bank has been under pressure after the U.S. Department of Justice asked Deutsche Bank to settle its mortgage-backed securities probe for $14 billion. The stock tumbled 7.1% and ended at a fresh all-time low.

Participants favored a risk-off stance throughout the session, bidding Treasuries, gold, and safe-haven currencies. The CBOE Volatility Index (VIX 14.49, +2.20) jumped more than two points as investors sought some portfolio insurance ahead of some key macro events. On that note, oil producers arrived in Algiers, Algeria today to kick off the International Energy Forum. The meeting is in focus as participants look for potential supply control measures from OPEC and non-OPEC members. The forum will run through September 28. WTI crude settled higher by 3.0% ($45.85/bbl; +$1.32).

The benchmark index notched a session low in the final hour of trade. Ten sectors ended in the red with consumer discretionary (-1.1%), health care (-1.2%), and financials (-1.5%) acting as the largest laggards. Conversely, defensively-oriented real estate (+0.2%) finished with the only gain.

The economically-sensitive financial sector (-1.5%) rounded out the leaderboard as the group moved lower in sympathy with European banking names. The space was also under pressure amid some flattening in the yield curve and the proposal of some stricter capital requirements for global systemically important banks. JPMorgan Chase (JPM 65.78, -1.47), Citigroup (C 45.89, -1.26), and Bank of America (BAC 15.09, -0.43) fell between 2.2% and 2.8%. The broader sector extended its 2016 loss to 1.5%, trailing the remaining sectors.

In the health care sector (-1.2%), Dow component Pfizer (PFE 33.64, -0.62) declined by 1.8% after announcing that it will not separate its Innovative Health & Essential Health divisions. Mylan Labs (MYL 41.18, -0.88) ended lower by 2.1% after reports indicated that there may be discrepancies between EpiPen profit data and previous information provided to Congress on the profitability of the device. The group also saw some selling interest ahead of this evening's debate.

Apparel name Nike (NKE 54.40, -0.75) weighed on the consumer discretionary space (-1.1%) after being removed from JP Morgan's Focus List. Meanwhile, Dow component Disney (DIS 91.96, -1.31) fell by 1.4% after headlines indicated that the company is debating making an offer to acquire Twitter (TWTR 23.37, +0.75).

The PHLX Semiconductor Index (-1.0%) finished behind the broader technology sector (-0.7%) as iPhone suppliers underperformed. Cirrus Logic (CRUS 51.32, -1.07) and Skyworks (SWKS 72.82, -1.95) finished lower by 2.0% and 2.6%, respectively.

Treasuries ended on a higher note with the long end of the curve outperforming. The yield on the 2-yr note finished lower by three basis points (0.73%) while the yield on the 10-yr note finished lower by four basis points (1.58%).

Today's participation was below the recent average as fewer than 775 million shares changed hands on the NYSE floor.

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

New home sales declined 7.6% month-over-month in August to a seasonally adjusted annual rate of 609,000 (Briefing.com consensus 585,000), but remained 20.6% higher than the estimate for the same period a year ago.

The annual sales pace in August was the highest since January 2008.

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

Tomorrow's economic data will include the Case-Shiller 20-city Index for July (Briefing.com consensus 5.1%) and Consumer Confidence for September (Briefing.com consensus 98.0), which will be released at 9:00 ET and 10:00 ET, respectively.

Russell 2000: +9.3% YTD

S&P 500: +5.0% YTD

Nasdaq: +5.0% YTD

Dow Jones +3.8% YTD