Day Traders Diary

10/19/16

 The stock market ended the midweek affair on a flat note as investors responded to a fresh batch of quarterly earnings reports and a rally in crude oil futures. The Dow Jones Industrial Average (+0.2%) settled in-line with the S&P 500 (+0.2%) and slightly ahead of the Nasdaq Composite (+0.1%).

The broader market inched higher at the start of the session as better-than-expected quarterly results from members of the energy (+1.4%) and financial (+0.8%) sectors helped boost risk appetite in the broader market.

Commercial banking name U.S. Bancorp (USB 43.58, +0.57) helped rally the industry group after reporting a bottom-line beat and estimating that net interest income will increase next quarter. Morgan Stanley (MS 32.93, +0.61) finished higher by 1.9% after beating top- and bottom-line estimates for the quarter. Meanwhile, oilfield service name Halliburton (HAL 49.07, +2.00) rallied 4.3% after topping earnings estimates and noting that rig count activity has been picking up.

Equity indices extended their gains after the opening hour as investors assessed the latest inventory data from the Department of Energy. The EIA reported that crude oil stockpiles declined by 5.24 million barrels (consensus: +2.70 million) while gasoline stockpiles rose by 2.46 million barrels (consensus: -1.31 million). The energy component jumped on the news, settling higher by 2.6% ($51.59/bbl; +$1.30).

The benchmark index gained lockstep with crude oil, briefly clearing technical resistance near the 2144 price level. However, the S&P 500 moved lower in the final hour as participants eyed potentially market-moving events out of the US and Europe. On that note, the European Central Bank will hold its October policy meeting tomorrow morning.

Eight sectors ended in positive territory with energy (+1.4%), financials (+0.8%), materials (+0.7%), and consumer discretionary (+0.5%) leading the pack. 

The economically-sensitive financial sector (+0.8%) outperformed as participants eyed above-consensus quarterly results and largely positive economic data. Dow component American Express (AXP 61.25, +1.17) finished at the top of the price-weighted average ahead of this evening's quarterly report. The broader financial sector extended its October gain to 1.7%, leading the remaining sectors over that period.

In the consumer discretionary sector (+0.5%), Netflix (NFLX 121.87, +3.08) extended its post-earnings winning streak, spiking 22.1% since reporting upbeat quarterly results on Monday evening. Tesla Motors (TSLA 203.56, +4.46) was also making waves after CEO Elon Musk confirmed that a product announcement will take place at 20:00 ET.

Chipmakers finished behind the broader technology sector (UNCH) as the PHLX Semiconductor Index slipped 0.5%. Intel (INTC 35.51, -2.24) weighed on the group after issuing disappointing fourth-quarter revenue and gross margin guidance. However, the company did beat top- and bottom-line estimates for the quarter. Shares of Intel finished lower by 5.9%.

Health care equipment names lagged in the health care space (-0.3%) with Intuitive Surgical (ISRG 681.58, -40.15) declining 5.6%. The downturn came despite the company reporting better-than-expected quarterly results. Separately, Abbott Labs (ABT 40.01, -1.16) declined 2.8% as some weakness in its nutrition sales masked largely in-line quarterly results.

Treasuries finished on a flat note as yields finished little changed across the curve. The yield on the 2-yr note settled at 0.80% while the yield on the benchmark 10-yr note finished at 1.74%.

Today's trading volume fell below the average of 853 million as 798 million shares changed hands at the NYSE floor.

Today's economic data included the weekly MBA Mortgage Index and Housing Starts/Building Permits for September:

The MBA Mortgage Index indicated that mortgage applications rose 0.6% in the week ending October 15. This followed a 6.0% decrease in the prior week.

Housing starts declined 9.0% in September to a seasonally adjusted annual rate of 1.047 million units (Briefing.com consensus 1.168 million) while permits -- a leading indicator -- increased 6.3% to a seasonally adjusted annual rate of 1.225 million (Briefing.com consensus 1.164 million).

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

Thursday's economic data will include the 8:30 ET release of weekly initial claims (Briefing.com consensus 249k) and the Philadelphia Fed Survey for October (Briefing.com consensus 5.5). Separately, the September Existing Home Sales Report (Briefing.com consensus 5.30 million) and September Leading Indicators (Briefing.com consensus 0.2%) will be released at 10:00 ET.

Russell 2000: +7.7% YTD

S&P 500: +4.9% YTD

Nasdaq Composite: +4.8% YTD

Dow Jones: +4.5% YTD