Day Traders Diary

11/10/16

 The stock market ended the Thursday affair on a mixed note as investors continued adjusting their positions in preparation for a Donald Trump presidency. The Dow Jones Industrial Average (+1.2%) notched a new all-time high while the S&P 500 (+0.2%) and the Nasdaq Composite (-0.8%) finished behind the price-weighted average.

Equity indices jumped out of the gate, looking to build on yesterday's strong performances. The major averages staged an impressive reversal on Wednesday, shrugging off unexpected results from the 2016 election cycle while assessing what a Trump administration may mean for capital markets. The benchmark index notched a high in the opening hour of today's session while the Dow Jones Industrial Average set a new all-time high in early afternoon action.

The major indices saw some intraday divergence as investors responded to expectations for reduced regulations, lower personal and corporate taxes, and fiscal stimulus through large infrastructure projects. The combination had heavily-weighted financials (+3.7%), industrials (+2.1%), and health care (+1.2%) at the top of the leaderboard.

The three sectors gained at the expense of the technology space (-1.6%). On that note, Alphabet (GOOG 762.56, -22.75) and Apple (AAPL 107.76, -3.12) fell roughly 2.9% apiece. The tech space underperformed as some participants shifted their exposure to areas that are expected to benefit from large public works projects.

The benchmark index finished the day modestly higher as six sectors logged gains. On the flipside, defensively-oriented consumer staples (-2.8%), utilities (-2.5%), and telecom services (-2.3%) rounded out the board.

The financial sector (+3.7%) displayed relative strength as banking names paced the advance amid growing hopes for reduced regulations. Another day of steepening in the yield curve also contributed to the sector's strength. The Wall Street Journal reported this afternoon that the Trump administration may consider scrapping portions of the Dodd-Frank Act. Dow components JPMorgan Chase (JPM 76.65, +3.40, +4.6%) and Goldman Sachs (GS 200.87, +8.24, +4.3%) finished at the top of the price-weighted average.

In the industrial sector (+2.1%), aerospace and defense names outperformed as United Technologies (UTX 108.41, +3.60) gained 3.4%. Meanwhile, the Dow Jones Transportation Average finished higher by 1.9% amid strength in rail names. Union Pacific (UNP 97.49, +3.54) rallied 3.8% amid rising commodity prices and expectations for large-scale infrastructure projects.

Biotechnology names outperformed in the health care space (+1.2%), evidenced by the 1.7% gain in the iShares Nasdaq Biotechnology ETF (IBB 289.78, +4.79). The group saw continued buying interest, shrugging off recent concerns regarding potential drug pricing measures. On a related note, Dow component Pfizer (PFE 33.49, +1.37) gained 4.3%.

The Treasury complex finished on a mostly lower note with the long-end of the curve underperforming. The yield on the 2-yr note finished higher by one basis point (0.91%) while the yield on the benchmark 10-yr note rose eight basis points to 2.14%.

Today's trading volume was above the average of 914 million as more than 1.4 billion shares changed hands at the NYSE floor.

Today's economic data included weekly initial claims and the Treasury Budget for October:

Initial jobless claims produced a positive surprise as they decreased by 11,000 for the week ending November 5 to 254,000 (Briefing.com consensus 262,000).

Continuing claims for the week ending October 29 increased by 18,000 to 2.041 million.

The Treasury Budget statement for October showed a deficit of $44.2 billion.

The Treasury data is not seasonally adjusted so the October deficit cannot be compared to the $136.6 billion deficit in September.

Tomorrow's economic data will be limited to the initial reading of the University of Michigan Consumer Sentiment Index for November (Briefing.com consensus 87.9), which will be released at 10:00 ET.