Day Traders Diary

4/19/17

Investors opened Wednesday's session with a modicum of optimism, but the positive sentiment seeped through the cracks, leaving the S&P 500 (-0.2%) lower for the second consecutive session. The Dow also settled in negative territory, losing 0.6%, while the Nasdaq (+0.2%) outperformed.

There were several factors that weighed on the equity market on Wednesday, not the least of which was another disappointing performance from the financial sector (-0.3%). The sector failed to capitalize, yet again, on a positive earnings report from one of its top components. Morgan Stanley (MS 42.04, +0.83) jumped 2.0% after beating top and bottom line estimates, but, in similar fashion to last week's reports from JPMorgan Chase (JPM 84.46, -0.70) and Citigroup (C 57.73, -0.69), the company's upbeat figures did little to rally the troops.

Crude oil also weighed on investor sentiment, plunging 3.6%, after the Energy Information Administration reported a smaller than expected draw (1.0 million bbl actual vs 1.4 million bbl consensus) in U.S. crude stocks for the week ending April 14. Unsurprisingly, the energy sector (-1.4%) settled at the bottom of the day's leaderboard by a relatively wide margin; the utilities group finished one spot higher in the standings with a loss of 0.7%. WTI crude ended its trading day at $50.96/bbl.

Other concerning factors that lingered in the market on Wednesday included:

Stretched valuations as earnings season heats up

IBM (IBM 161.69, -8.36) reporting a year-over-year decline in revenue for the 20th consecutive quarter

Heightened geopolitical uncertainty, especially in regards to the upcoming French presidential election

Growing angst about the state of tax reform

However, despite numerous unanswered questions, the day's risk-off tone was largely contained in the equity market as Treasuries and gold ended the session in negative territory. The benchmark 10-yr yield added four basis points, settling at 2.21%, while the yellow metal ended 0.8% lower at $1,283.40/ozt. Also of note, the domestically-oriented Russell 2000 outperformed, adding 0.4%.

The bulls didn't win Wednesday's session, but they did do enough to keep the bears in check, something not to be overlooked as the S&P 500 continues to drift below its 50-day moving average (2355).

On the earnings front, investors received the weekly MBA Mortgage Applications Index:

The weekly MBA Mortgage Applications Index decreased 1.8% to follow last week's 1.5% increase.

Tomorrow, investors will receive Initial Claims (Briefing.com consensus 242,000) and the Philadelphia Fed Survey for April (Briefing.com consensus 23.7) at 8:30 ET and March Leading Indicators (Briefing.com consensus 0.3%) at 10:00 ET.

Nasdaq Composite +8.9% YTD

S&P 500 +4.4% YTD

Dow Jones Industrial Average +3.3% YTD

Russell 2000 +0.8% YTD