Day Traders Diary

2/7/17

 Minimal movement on Monday set the tone for Tuesday's flat finish as the major averages closed the day relatively unchanged in what was a range-bound trading session. The Nasdaq (+0.2%) and the Dow (+0.2%) eked out small gains while the S&P 500 finished right at its flat line.

Countercyclical sectors had a slight advantage during Tuesday's session with four of the five posting gains. Consumer staples (+0.8%) finished atop the day's leaderboard with Church & Dwight (CHD 47.27, +1.82) adding 4.0% after reporting better than expected earnings and raising its dividend.

On the cyclical side, technology (+0.4%) outpaced the benchmark index on the back of another solid showing from Apple (AAPL 131.53, +1.24). Industrials (+0.2%) were the only other cyclical sector to finish the day higher, rallying around the 4.5% jump in shares of Emerson Electric (EMR 62.54, +2.68). The company beat top and bottom line estimates and issued upbeat guidance for 2017.

General Motors (GM 35.10, -1.73) also reported positive quarterly results before Tuesday's opening bell, beating earnings and revenue estimates. However, the earnings beat may have taken a back seat to the company's 3.8% year-over-year decline in January sales considering shares of GM finished the day lower by 4.7%. Fellow automaker Ford Motor (F 12.34, -0.18) also experienced some pressure, closing 1.4% lower.

The consumer discretionary sector (-0.1%) couldn't escape the automakers' selling pressure. Financials (-0.2%) and materials (-0.8%) also finished in the red, but none fell farther than energy (-1.4%). The energy space moved lower in tandem with crude oil, which was weighed down by myriad concerns. An uptick in U.S. production, signs of slowing demand growth, and a 0.5% climb in the U.S. Dollar Index (100.30, +0.46) left the energy component 1.6% lower at $52.18/bbl.

The U.S. dollar's movement was rooted in comments from Philadelphia Fed President Patrick Harker. On Monday evening, Mr. Harker, who is an FOMC voting member, stated that he would be open to a March rate hike. The news pushed the U.S. Dollar Index (100.25, +0.41) to its highest level of the month (100.66), but a dovish statement during Tuesday's session from Minneapolis Fed President Neel Kashkari, who is also an FOMC voting member, facilitated a pullback in the Dollar Index.

However, regardless of the headlines, the market remains confident that there will be no rate hike in March; the fed funds futures market shows an 8.9% implied probability of a March rate hike, which is unchanged from Monday's reading.

Economic data reported on Tuesday included December Trade Balance, December Job Openings and Labor Turnover Survey, and December Consumer Credit:

The December trade balance showed a deficit of $44.3 billion while the Briefing.com consensus expected the deficit to hit $45.0 billion. The previous month's deficit was revised to $45.7 billion from $45.2 billion.

The key takeaway from the report is that it could stir the political trade pot since there were trade deficits recorded with China, the European Union, Japan, Germany, and Mexico. That isn't new, yet there's a new administration that isn't too fond of that dynamic.

The December Job Openings and Labor Turnover Survey showed that job openings decreased to 5.501 million from a revised 5.505 million (from 5.522 million) in November.

The Consumer Credit report for December showed an increase of $14.2 billion while the Briefing.com consensus expected growth of $19.4 billion. The prior month's credit growth was revised to $25.2 billion from $24.5 billion.

Wednesday's lone economic report will be the 7:00 am ET release of the MBA Mortgage Applications Index.

Nasdaq Composite +5.4% YTD

S&P 500 +2.4% YTD

Dow Jones Industrial Average +1.7% YTD

Russell 2000 +0.3% YTD