Day Traders Diary

11/15/16

 The major averages ended the midweek affair on a mixed note as investors continued to fine-tune their post-election positioning. The Nasdaq Composite (+0.4%) finished ahead of the S&P 500 (-0.2%) and the Dow Jones Industrial Average (-0.3%). The three indices are now up between 2.0% and 4.0% in November.

Equity indices diverged at the start of the session as profit-taking activity weighed on the post-election landscape. Investors continued to book profits on their reflationary trades, leading to pull backs in financials (-1.4%; month-to-date: +10.7%), industrials (-0.7%; month-to-date: +6.6%), and materials (-0.1%; month-to-date: +3.4%).

In addition, the top-weighted technology sector (+0.9%; month-to-date: -1.0%) rebounded after last week's underperformance, which occurred as investors left sector mainstays in favor of stocks better positioned for large-scale public works projects.

The S&P 500 (-0.2%) finished modestly lower with eight groups losing ground. The financial (-1.4%) sector rounded out the board while telecom services (+1.0%), technology (+0.9%), and consumer discretionary (+0.5%) outperformed.

Banking names continued to underperform in the financial sector (-1.4%) as Dow component JPMorgan Chase (JPM 77.40, -1.96) fell 2.5%. Banks rallied in the immediate aftermath of the election as a steepening yield curve boosted earnings prospects for the group. There has also been a fair amount of speculation regarding the Trump Administration reducing regulations for the industry. JPMorgan Chase remains up 11.8% so far this month.

The energy space (-0.9%) slid amid a downtick in crude oil futures. WTI crude fell 0.7% ($45.56/bbl; -$0.31) after the Department of Energy released a bearish inventory report. The EIA reported that crude oil inventories increased by 5.27 million barrels (consensus: +1.48 million) while gasoline stockpiles rose by 0.74 million barrels (consensus: -0.41 million). However, losses were held in check by some positive jawboning from Russian Energy Minister Alexander Novak.

The Dow Jones Transportation Average (-0.7%) also saw some profit taking as rail names narrowed their recent gains. Union Pacific (UNP 98.01, -1.10) finished lower by 1.1%, narrowing its month-to-date gain to 11.2%. In the broader industrial sector (-0.7%), Lockheed Martin (LMT 263.35, -2.58, -1.0%) trimmed its November gain to 6.8%.

In the consumer discretionary space (+0.5%), shares of discount retailer Target (TGT 76.03, +4.59) rallied 6.4% after the company reported a bottom-line quarterly beat and issued better-than-expected comparable sales guidance for the fourth quarter. Separately, Dow component Disney (DIS 99.12, +1.41) rose 1.4% after being upgraded to "Buy" from "Hold" at Deutsche Bank.

The Treasury complex finished on a modestly higher note while the 30-yr bond outperformed, recovering early losses after a lukewarm inflation reading. The October Producer Price Index (PPI) came in flat while the index for final demand, less food and energy, fell 0.2%. The headline index is up 0.8% year-over-year while the core reading checks in at 1.2% year-over-year. Despite today's four-basis point decline, the 30-yr yield (2.92%) is up 34 basis points so far in November. For its part, the 10-yr yield ended unchanged at 2.22%.

Today's trading volume was below the average of 924 million as fewer than 869 million shares changed hands at the NYSE floor.

Today's economic data included the weekly MBA Mortgage Index, October PPI, October Industrial Production/Capacity Utilization, and the November NAHB Housing Market Index:

The MBA Mortgage Index indicated that mortgage applications fell 9.2% in the week ending November 12. This followed a 1.2% decline in the prior week.

The Producer Price Index for October was unchanged (Briefing.com consensus +0.3%) while the index for final demand, less food and energy, was down 0.2% (Briefing.com consensus +0.2%).

Industrial production was unchanged in October (Briefing.com consensus +0.2%) after declining a downwardly revised 0.2% (from +0.1%) in September.

The capacity utilization rate slipped to 75.3% (Briefing.com consensus 75.5%) from an unrevised 75.4% in September.

The NAHB Housing Market Index for November came in at 63 from an unrevised 63 in October. The Briefing.com consensus expected the reading to come in at 64.0.

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 CPI for October (Briefing.com consensus +0.4%), October Housing Starts (Briefing.com consensus 1178k) and Building Permits (Briefing.com consensus 1200k), weekly initial claims (Briefing.com consensus 257k), and the Philadelphia Fed Survey for November (Briefing.com consensus 7.0). On a separate note, Fed Chair Janet Yellen is scheduled to testify before the Joint Economic Committee tomorrow at 10:00 ET. This will be Chair Yellen's first opportunity to address monetary policy since the election.

Russell 2000: +14.6% YTD

Dow Jones: +8.3% YTD

S&P 500: +6.5% YTD

Nasdaq Composite: +5.7% YTD