Day Traders Diary

2/21/17

Last week's bullish sentiment carried over into the first session of the new week as investors decidedly pushed the stock market to new record highs on Tuesday. The S&P 500 (+0.6%) and the Dow (+0.6%) led the advance with the Nasdaq (+0.5%) closing just a step behind.

Equity indices came out of the gate strong this morning, rallying on an uptick in crude oil and the highest eurozone composite PMI reading in nearly six years. But the stock market hit a speed bump in front of the 12:00 pm ET speech from Philadelphia Fed President Patrick Harker who is a voter on this year's FOMC. The speech turned out to be a non-event as Mr. Harker didn't provide any new information, reiterating his belief that three rate hikes are appropriate for 2017.

After trending sideways in the wake of Mr. Harker's comments, the major averages regained their momentum late in the afternoon session to hit fresh session highs going into the close.

The lightly-weighted real estate sector (+1.3%) led the afternoon advance, stealing the top spot on the day's leaderboard from the energy space (+0.7%). The energy group's performance depended upon crude oil, which stunted the sector's advance after slipping from its session high. The energy component still closed with a solid gain, up 1.1% at $54.37/bbl, as strong OPEC supply cut compliance overshadowed record high U.S. inventories.

Consumer staples (+1.0%) finished just behind the real estate sector following Wal-Mart's (WMT 71.45, +2.08) upbeat earnings report. WMT shares jumped 3.0% after the company reported better than expected earnings per share and raised its dividend.

On the consumer discretionary (+0.6%) side, Home Depot (HD 145.02, +2.02) also had a solid showing after beating top and bottom line estimates. In addition, HD increased its quarterly dividend and authorized a $15.0 billion share repurchase program.

The remaining sectors finished in the green, posting gains between 0.4% (materials) and 1.1% (utilities). Health care's (+0.5%) advance was particularly notable given the underperformance in biotech names that sent the iShares Nasdaq Biotechnology ETF (IBB 293.04, -1.27) lower by 0.4%.

The Treasury market began Tuesday with a sizable loss, but dovish comments from Minneapolis Fed President Neel Kashkari (FOMC voter) brought Treasuries back to their flat lines. In the morning session, Mr. Kashkari stated that the U.S. labor market has "more room to run," suggesting that he believes there is no hurry for the Fed to raise rates.

The benchmark 10-yr yield finished the day one basis point higher at 2.43% after showing a four basis point gain earlier in the session.

Investors did not receive any notable economic data on Tuesday.

Wednesday will see several economic reports, including the MBA Mortgage Application Index at 7:00 am ET, January Existing Home Sales (Briefing.com consensus 5.57 million) at 10:00 am ET, and FOMC Minutes at 2:00 pm ET.

Nasdaq Composite +9.0% YTD

S&P 500 +5.7% YTD

Dow Jones Industrial Average +5.0% YTD

Russell 2000 +3.9% YTD