Day Traders Diary

11/3/16

The stock market ended the Thursday affair on a lower note as the S&P 500 (-0.4%) retreated for the eighth consecutive session. Sellers remained more eager than buyers as falling oil prices, persistent political uncertainty, and weakness in the technology (-1.0%) and health care (-1.0%) sectors weighed on investor sentiment. The Nasdaq Composite (-0.9%) finished behind the benchmark index (-0.4%) and the Dow Jones Industrial Average (-0.2%).

Equity indices stumbled in the opening hour as a reversal in crude oil and weakness in the influential technology sector (-1.0%) weighed on the broader market.

Oil began the day on a modestly higher note, rebounding from its recent losing streak. The energy component has been under pressure in recent days as investors reassess the previously announced OPEC supply freeze agreement and mull over some disappointing weekly inventory data. WTI crude slipped below the $45.00/bbl in the opening hour, finishing down 2.0% ($44.45/bbl; -$0.89). Today's retreat has the energy component down 8.8% so far this week.

Social media name Facebook (FB 119.95, -7.22, -5.7%) also weighed on investor sentiment as a disappointing revenue growth outlook masked a bottom-line beat. The F.A.N.G. name weighed on fellow technology bellwethers with Apple (AAPL 109.83, -1.19) and Alphabet (GOOG 762.13, -6.57) falling 1.1% and 0.9%, respectively. Top-weighted Apple has now declined 7.1% since October 25 when the company released underwhelming quarterly results and guidance. Chipmaker Qualcomm (QCOM 66.98, -0.14) also finished down 0.2%.

The broader market extended its loss into midday as biotechnology tacked onto its recent losing streak. The iShares Nasdaq Biotechnology ETF (IBB 246.87, -7.46, -2.9%) extended its weekly loss to 5.2% as Allergan (AGN 188.82, -9.07, -4.6%) and Mylan (MYL 34.14, -2.53, -6.9%) weighed on the group. The two saw additional selling pressure when CNBC reported that the U.S. Department of Justice will be looking into the pricing practices of generic pharmaceutical companies.

The benchmark index carved out a session low in the final hour of trade as nine sectors ended in negative territory. Technology (-1.0%) and health care (-1.0%) finished at the bottom of the leaderboard while energy (+0.4%), utilities (+0.3%), and financials (+0.3%) finished with the only gains.

In the consumer discretionary space (-0.3%), 21st Century Fox (FOXA 27.74, +1.91) jumped 7.4% after beating bottom-line estimates for the quarter. The company bolstered the media sub-group, helping Dow component Disney (DIS 93.37, +1.46, +1.6%) finish at the top of the price-weighted average. On the flipside, Starbucks (SBUX 51.77, -1.21) fell 2.3% ahead of this evening's quarterly report.

The economically-sensitive financial sector (+0.3%) outperformed as life insurance names displayed relative strength. Prudential (PRU 86.67, +2.88) rallied 3.4% after topping analysts' estimates for the quarter. The space also gained on slight steepening in the yield curve. On the flipside, American International Group (AIG 58.15, -2.40) ended lower by 4.0% despite a bottom-line beat.

Treasuries finished on a mixed note as the long end of the curve underperformed. The yield on the 2-yr note finished flat (0.82%) while the yield on the 10-yr note finished the day up one basis point (1.81%).

Today's trading volume was above the average of 860 million as more than 880 million shares changed hands at the NYSE floor.

Today's economic data included October Challenger Job Cuts, Initial Claims, third quarter Productivity and Unit Labor Costs, Factory Orders for September, and ISM Services for October:

October Challenger Job Cuts were reported at 30,700, which compares to the prior month's reading of 44,300.

Initial claims for the week ending October 29 rose by 7,000 to 265,000 (Briefing.com consensus 256,000).

Continuing claims for the week ending October 22 decreased by 14,000 to 2.026 million.

Nonfarm business sector labor productivity increased at a 3.1% annual rate in the third quarter (Briefing.com consensus 1.8%).

This was the first increase after three consecutive quarterly declines and was further underpinned by an upward revision to second quarter productivity to -0.2% from -0.6%.

Unit labor costs increased 0.3% (Briefing.com consensus +1.2%) following a downwardly revised 3.9% increase (from 4.3%) in the second quarter.

New orders for manufactured goods increased 0.3% in September (Briefing.com consensus +0.2%) on top of an upwardly revised 0.4% increase (from 0.2%) in August.

The ISM Non-Manufacturing Index dropped to 54.8 in October (Briefing.com consensus 55.8) from 57.1 in September.

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

Tomorrow's economic data will include the 8:30 ET release of the September Trade Balance (Briefing.com consensus -$38.5 billion) and the Employment Situation Report for October. The Briefing.com consensus expects the jobs report to show an increase of 175,000 in nonfarm payrolls.