Day Traders Diary

3/7/17

Tuesday's session was largely uneventful as market-moving catalysts were in short supply. The major averages trended just below their flat lines for the majority of the session, but a late afternoon sell-off left them near their worst levels of the day. The Nasdaq (-0.3%) finished in line with the S&P 500 (-0.3%) while the Dow (-0.1%) closed with a slight advantage.

Despite the equity market's minimal movement, House Republicans mixed things up beneath the surface after unveiling their first attempt at replacing the Affordable Care Act, also known as Obamacare, on Monday evening. The proposed legislation was a hit with President Trump, but other members within the GOP have demonstrated resistance to the bill, indicating that its implementation may be somewhat challenging. Investors are keeping an anxious eye on Washington, knowing that any delay in health care reform also postpones the impending tax reform, which has been a key catalyst to the stock market's huge post-election rally.

The health care sector (-0.7%) finished the day behind the broader market as investors digested the latest news from the nation's capital. The biotechnology industry showed relative weakness within the group, evidenced by the 1.7% drop in the iShares Nasdaq Biotechnology ETF (IBB 294.75, -5.08).

At the bottom of Tuesday's leaderboard, energy (-0.9%) and telecom services (-0.7%) struggled throughout the day. The energy space didn't find much support from crude oil, which finished 0.2% lower at $53.13/bbl, as futures traders displayed caution ahead of the American Petroleum Institute (API) data release on Tuesday evening.

Conversely, utilities (unch) and technology (+0.2%) finished at the top of the day's sector standings with the technology group profiting on gains from large-cap components like Apple (AAPL 139.52, +0.18) and Alphabet (GOOGL 851.15, +3.88). Chipmakers also 'chipped' in to help the tech sector's outperformance, evidenced by the 0.3% increase in the PHLX Semiconductor Index.

The remaining sectors--financials, consumer discretionary, industrials, materials, consumer staples, and real estate--finished with losses between 0.1% and 0.6%.

U.S. Treasuries had a rather range-bound session, failing to deviate much from their flat lines throughout the day's action. The 10-yr Treasury note finished modestly lower with its yield closing one basis point higher at 2.51%.

Tuesday's economic data included January Trade Balance and January Consumer Credit:

• The January trade balance showed a deficit of $48.5 billion, which is in line with the Briefing.com consensus. The previous month's deficit was left unrevised at $44.3 billion.
  • The key takeaway from the report is twofold: (1) it will feed the White House's concerns about unfair trade dynamics and (2) it presents a negative input for first quarter GDP forecasts as the real goods deficit of $65.3 billion widened from the fourth quarter average of $62.2 billion.
• The Consumer Credit report for January showed an increase of $8.8 billion while the Briefing.com consensus expected growth of $17.0 billion. The prior month's credit growth was revised to $14.8 billion from $14.2 billion.
  • The key takeaway from the report is that consumer credit decelerated in January, which is apt to contribute to subdued expectations for the pace of consumer spending and GDP growth in the first quarter.

Tomorrow's economic data will include the weekly MBA Mortgage Index at 7:00 ET, February ADP Employment Change (Briefing.com consensus 180,000) at 8:15 ET, fourth quarter Productivity (Briefing.com consensus 1.5%) & Unit Labor Costs (Briefing.com consensus 1.6%) at 8:30 ET, and January Wholesale Inventories (Briefing.com consensus -0.1%) at 10:00 ET.

• Nasdaq Composite +8.4% YTD
• Dow Jones Industrial Average +5.9% YTD
• S&P 500 +5.8% YTD
• Russell 2000 +1.3% YTD