Day Traders Diary

1/23/17

Equity indices opened the week on a down note, unable to overcome the uncertainty surrounding the transfer of political power in Washington D.C. An afternoon rebound helped the market erase a portion of its loss, but the S&P 500 still finished lower by 0.3% while the Nasdaq (unch) finished just below its flat line.

The trading session was defined by risk-off action, leading to a downtick in the U.S. dollar and an uptick in the Treasury market. The 10-yr yield finished seven basis points lower at 2.40%, while the U.S. Dollar Index (100.14, -0.63) closed down 0.6%, a level not seen since early December.

However, the dollar's relative weakness was not enough to offset concerns about a bump in U.S. crude oil production, which pushed WTI crude down 0.9% to $52.75/bbl. Naturally, the energy sector followed, closing lower by 1.1% to finish at the bottom of today's leaderboard.

Crude oil doesn't deserve all of the blame, as Halliburton (HAL 54.80, -1.65) also contributed to the energy sector's decline, losing 2.9% after missing revenue estimates. McDonald's (MCD 121.38, -0.88) also reported quarterly results this morning. The company beat estimates, but shares declined 0.9% amid concerns about the strength of first-quarter results.

Yet, despite McDonald's downbeat report, the consumer discretionary sector (+0.1%) outperformed the broader market, finishing just above its flat line. Homebuilders had a hand in the sector's resistance to selling pressure, evidenced by the 0.4% jump in the iShares U.S. Home Construction ETF (ITB 27.91, +0.12). Also of note, the sector's top component, Amazon (AMZN 817.88, +9.55) finished higher by 1.2% after the New York Post reported that the company will be entering the auto parts retail space.

The technology sector was also able to resist the market's bearish trend, finishing with a modest 0.1% gain. Top components like Facebook (FB 128.93, +1.89), Alphabet (GOOGL 844.43, +16.26), Cisco Systems (CSCO 30.27, +0.17), and Visa (V 82.15, +0.31) were able to outpace losses from the semiconductor industry. The PHLX Semiconductor Index finished the day lower by 0.7%.

On the non-cyclical side, real estate (+0.6%) finished at the top of the leaderboard, while telecom services (+0.5%) and consumer staples (-0.1%) also outperformed. Conversely, utilities (-0.5%) and health care (-0.5%) had a rough showing. In top news from the health care space, a federal court ruling blocked Humana's (HUM 205.02, +4.49) pending merger with Aetna (AET 119.20, -3.33). Humana jumped 2.2% on the ruling, while Aetna lost 2.7%.

Looking ahead, the earnings season kicks into gear this week with around 20.0% of the S&P 500 set to report quarterly results. Yahoo! (YHOO 42.40, +0.35) is scheduled to report after today's close, while Dow components 3M (MMM 178.51, +0.02), DuPont (DD 72.78, -0.25), and Johnson & Johnson (JNJ 113.94, -0.21) will report on Tuesday morning.

Investors did not receive any economic data on Monday, with the first report of the week, December Existing Home Sales (Briefing.com consensus 5.55 million), scheduled for tomorrow morning at 10:00 am ET.

Russell 2000 -0.7% YTD

Dow Jones Industrial Average +0.2% YTD

S&P 500 +1.2% YTD

Nasdaq Composite +3.2% YTD