Day Traders Diary

3/14/17

 Crude oil was a persuasive force in the stock market on Tuesday, leading the major averages into negative territory after OPEC's latest Monthly Oil Market Report (MOMR) showed some concerning production figures out of Saudi Arabia. The S&P 500 and the Nasdaq lost 0.3% apiece while the Dow (-0.2%) held up modestly better.

The energy sector (-1.1%) closed at the bottom of the day's leaderboard as WTI crude suffered from a wave of selling pressure in response to an increase in production out of Saudi Arabia in the month of February. However, Saudi officials did make follow-up comments to the report, saying that the uptick in production went into domestic storage, not international markets. The claim helped the energy component regain some of its early loss in the afternoon session, but WTI crude still closed the day lower by 1.5% at $47.69/bbl.

Finishing near the energy sector, the industrials (-0.9%) and materials (-0.8%) groups struggled to keep pace with the broader market as political uncertainty regarding President Trump's proposed budget, which is expected to include $1 trillion for infrastructure spending, looms in Washington.

Elsewhere in the nation's capitol, House Republicans' proposed replacement of the Affordable Care Act was being met with increased resistance after the Congressional Budget Office (CBO) released its research report on Monday evening. Details of the report aside, it is clear that passing the bill may prove to be challenging for GOP leaders, which could delay the tax reform that investors have been counting on. Despite all the noise, the health care sector (-0.3%) finished in line with the broader market.

At the top of the day's leaderboard was the consumer discretionary space (unch) with retailers representing a pocket of strength; the SPDR S&P Retail ETF (XRT 41.91, +0.03) finished the day higher by 0.1%. The rate-sensitive utilities (-0.1%) and real estate (-0.2%) groups also outperformed as increased buying interest in the Treasury market left interest rates lower. The benchmark 10-yr yield closed three basis points lower at 2.59%.

The start of the week has been slow but investors will need to have their heads on a swivel tomorrow as they will be hit with a slew of economic reports, the latest EIA crude oil inventory report, and, most notably, the FOMC's official rate decision.

Today's lone economic report, February PPI, came in hotter than expected:

February producer prices increased 0.3%, which is above the Briefing.com consensus of 0.1%. Core producer prices increased 0.3% while the Briefing.com consensus expected an increase of 0.2%.

The key takeaway from the report is that inflation at the producer level is picking up and is feeding concerns about a potential pass-through effect to consumers.

Tomorrow's economic data will include the weekly MBA Mortgage Applications Index at 7:00 ET, February CPI (Briefing.com consensus 0.1%), February Retail Sales (Briefing.com consensus 0.1%), and March Empire Manufacturing (Briefing.com consensus 14.5) at 8:30 ET, January Business Inventories (Briefing.com consensus 0.3%) and March NAHB Housing Market Index (Briefing.com consensus 65) at 10:00 ET, and the FOMC Rate Decision at 14:00 ET.

Nasdaq Composite +8.8% YTD

S&P 500 +5.7% YTD

Dow Jones Industrial Average +5.4% YTD

Russell 2000 +0.4% YTD