Day Traders Diary



Investors took some money off the table after a strong month and ahead of President Trump's first prime-time address to Congress, which is scheduled for tonight at 9:00 pm ET. The S&P 500 (-0.3%) and the Dow (-0.1%) held slim losses throughout the day's session, while the Nasdaq's (-0.6%) slip was a bit more substantial. Meanwhile, the Russell 2000 finished with a sizable loss of 1.4%. For the month, the Dow gained 4.8% while the Nasdaq and S&P 500 added 3.8% and 3.7%, respectively.

President Trump is expected to touch on variety of topics in his speech, including tax reform, infrastructure spending, health care, military spending, and border security, but it is unclear if Mr. Trump will share any specific details on anything other than his defense budget.

Nonetheless, investors will be watching carefully, looking for any clues as to the timing and the final form of the President's pro-growth promises that have sent the benchmark index nearly 10.5% higher since the November 8 election.

Despite minimal movement on the macro level, micro motion was alive and well, especially on the earnings front. Target (TGT 58.77, -8.14) plunged 12.2% after the company missed earnings estimates and issued weak guidance.

Retailers responded to Target's misstep with a tumble of their own, pushing the SPDR S&P 500 Retail ETF (XRT 42.99, -1.04) lower by 2.4% and leaving the consumer discretionary sector with a loss of 0.7%.

Surprisingly, consumer staples (+0.2%) left Tuesday relatively unscathed, countering losses from retailers like Wal-Mart (WMT 70.93, -0.81) and Costco (COST 177.18, -0.44) with a bounceback performance from multinational food giants like Mondelez International (MDLZ 43.92, +0.15), Kraft-Heinz (KHC 91.50, +0.89), and General Mills (GIS 60.37, +0.43) following their sell-off on Monday.

The financial sector (-0.2%) outpaced the benchmark index on Tuesday despite a slide in discount brokers, who fell in reaction to the decreased earnings prospects linked to Fidelity's decision to reduce the price of its online trading commission. The move was seen as shot fired in the price war that is developing within the industry.

Energy (-0.2%) closed Tuesday's session slightly lower, ticking up in the final minutes following an afternoon spike in crude oil. The energy component finished just below its flat line, down 0.1% at $54.01/bbl, after recouping almost all of its large early-morning loss. An afternoon rally ensued in the wake of a Reuters report that OPEC members have achieved 94.0% compliance with supply cuts that were agreed to in February.

The top-weighted technology sector (-0.4%) also finished the day lower, burdened by a poor showing from chipmakers; the PHLX Semiconductor Index finished Tuesday with a loss of 1.3%.

The U.S. Treasury yield curve flattened today as selling pressure in shorter-dated issues left the 2yr-yield three basis points higher at 1.23%. Meanwhile, the benchmark 10-yr yield finished its trading day unchanged at 2.36%.

Today's economic data included the second estimate of fourth quarter GDP, February Chicago PMI, February Consumer Confidence, January International Trade in Goods, and January Case-Shiller 20-city Home Price Index:

  • The second reading of fourth quarter GDP pointed to an expansion of 1.9%, while the consensus expected a reading of 2.1%. The second estimate of fourth quarter GDP Deflator came in at 2.0%, while the consensus expected a reading of 2.1%.
    • The key takeaway from the report is that soft business spending continues to act as a drag on GDP growth.
  • Chicago PMI for February increased to 57.4 from 50.3 in January while the consensus expected a reading of 53.0.
    • The key takeaway from the report is that the prices paid component hits its highest level (68.6) in about two and a half years, which speaks to building inflationary pressures for manufacturers in the Chicago Fed region.
  • The consumer confidence reading for February rose to 114.8 from the prior month's revised reading of 111.6 (from 111.8). The consensus expected the survey to hit 111.5.
    • The key takeaway from the report is that consumers are feeling better about current business and labor market conditions than they did in January; accordingly, they expect the economy to continue to expand in the months ahead.
  • The Advance report for International Trade in Goods for January showed a deficit of $69.2 billion, up from a revised deficit of $64.4 billion for December (from $65.0 billion). The Advance report for January Wholesale Inventories decreased 0.1%. The prior month's reading was revised to 0.9% from 1.0%.
  • The Case-Shiller 20-city Home Price Index for January rose 5.6%. This followed the previous month's unrevised reading of 5.6%.

Tomorrow's economic data will include the MBA Mortgage Applications Index at 7:00 ET, January Personal Income ( consensus 0.4%) at 8:30 ET, January Construction Spending ( consensus 0.6%) and February ISM Index ( consensus 56.1%) at 10:00 ET, and the Fed's Beige Book for March at 14:00 ET.

Also of note, February Auto and Truck sales will be released throughout the day on Wednesday.

  • Nasdaq Composite +8.2% YTD
  • S&P 500 +5.6% YTD
  • Dow Jones Industrial Average +5.3% YTD
  • Russell 2000 +2.2% YTD

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