Day Traders Diary

4/6/17

The major averages registered modest gains on Thursday, keeping the S&P 500 (+0.2%) several points above its 50-day moving average (2346). The benchmark index settled near the middle of the day's range while the Nasdaq and Dow added 0.3% and 0.1%, respectively. Also of note, the domestically-oriented Russell 2000 bounced back from its disappointing performance yesterday to settled higher by 0.9%.

Stocks pushed into positive territory early in the morning session, where they comfortably remained until the afternoon. Then, without warning, equities gave back nearly all of their modest gains in an early-afternoon move towards their flat lines. There was no clear catalyst behind the sudden move, but it is clear that comments from President Trump and Secretary of State Rex Tillerson didn't do anything to alleviate the bearish sentiment.

Mr. Trump said the United States is prepared to act alone on North Korea if China is not willing to assist. In addition, the president and Secretary of State Rex Tillerson signaled that something needs to be done about Syrian President Bashar al-Assad. Recalling that investors were already a little antsy ahead of President Trump's two-day meeting with Chinese President Xi Jinping, the comments added to the underlying anxiety.

The leaders of the world's two largest economies will have the opportunity to clear the air over the next couple of days, kicking off their two-day talks with dinner this evening in Palm Beach, FL. Investors will be keeping a close eye on reports from the discussions, hoping for a positive signal to keep the bears at bay.

In terms of sector standings, cyclical groups had the upper hand on their countercyclical peers throughout the day's action. The energy group (+0.8%) acted as a pillar of strength in the cash market with crude oil underpinning the positive performance. The commodity closed the day 1.1% higher at $51.71/bbl, marking its seventh advance in eight sessions.

Retailers provided the consumer discretionary sector (+0.4%) with some strength, evidenced by the 2.0% increase in the SPDR S&P Retail ETF (XRT 41.65, +0.83). The positive sentiment was attributed to several companies reporting better than expected same-store sales for the month of March.

Conversely, the technology sector (-0.1%) was the only cyclical group to settle in the red after a lackluster performance from some of its top components like Apple (AAPL 143.66, -0.36), Alphabet (GOOGL 845.10, -3.82), and Facebook (FB 141.17, -0.68). Similarly, most countercyclical sectors finished in negative territory with the telecom services group (-1.6%) closing at the bottom of the day's leaderboard.

In the Treasury market, Treasuries settled just below their unchanged marks with the benchmark 10-yr yield closing one basis point higher at 2.34%. Today's downtick follows yesterday's counter-intuitive move which left U.S. sovereign debt higher despite the FOMC Minutes showing that the Fed plans to start unwinding its balance sheet later in the year.

On the data front, investors only received one notable economic report--Initial Claims--in today's session:

The latest weekly initial jobless claims count totaled 234,000 while the Briefing.com consensus expected a reading of 245,000. Today's tally was below the revised prior week count of 259,000 (from 258,000). As for continuing claims, they declined to 2.028 million from the unrevised count of 2.052 million.

This data won't affect the outlook for the March Employment Situation Report, yet it continues to be reflective of an improving labor market.

Tomorrow, investors will receive the March Employment Situation Report (Briefing.com consensus 180,000) at 8:30 ET, February Wholesale Inventories (Briefing.com consensus 0.4%) at 10:00 ET, and February Consumer Credit (Briefing.com consensus $14.0 billion) at 15:00 ET.

Nasdaq Composite +9.2% YTD

S&P 500 +5.3% YTD

Dow Jones Industrial Average +4.6% YTD

Russell 2000 +0.5% YTD