Day Traders Diary

5/2/17

  Investors chose to play it safe on Tuesday with Apple's (AAPL 147.51, +0.93) quarterly report on tap. As a result, the major averages never really deviated from their unchanged marks with the S&P 500 (+0.1%) trading within a seven-point range. The Nasdaq (+0.1%) settled in line with the benchmark index while the Dow (+0.2%) finished just a tad bit higher.

Apple, which is the largest company by market cap, has played a huge role in the stock market's 2017 campaign, evidenced by the company's 27.4% year-to-date gain. Consequently, investors lacked conviction in moving the market one way or the other with such an influential piece of information--AAPL's latest earnings report--looming.

Sector standings reflected the wait-and-see strategy with eight of eleven settling within 0.3% of their flat lines. The top-weighted technology space (+0.3%) showed relative strength despite the underperformance of chipmakers, which pushed the PHLX Semiconductor Index lower by 1.1%. Advanced Micro Devices (AMD 10.30, -3.32) led the semiconductor retreat, plunging 24.4%, despite reporting in-line earnings and revenues. However, it's important to keep in mind that AMD surged 295.1% in 2016.

Like technology, the health care sector (+0.3%) exhibited relative strength. Within the sector, Merck (MRK 62.70, +0.32) and Pfizer (PFE 33.61, -0.17) beat earnings estimates, but their top-line results differed; MRK reported better than expected revenues while PFE missed its mark.

Airlines helped the industrial sector (+0.5%) finish atop the day's leaderboard, rallying around Delta Air Lines' (DAL 47.83, +2.43) 1.0% year-over-year increase in passenger revenue (PRASM) for the month of April. Cummins (CMI 160.56, +9.23) also contributed to the cause, adding 6.1%, after reporting better than expected earnings/revenues and providing upbeat guidance. The consumer discretionary (+0.2%), materials (+0.2%), utilities (+0.3%), and real estate (+0.1%) spaces also closed in positive territory.

On the flip side, the energy sector (-0.5%) was influenced negatively by crude oil's 2.5% decline. The energy component was weak throughout Tuesday's session, but widened its loss considerably in the afternoon ahead of the weekly crude inventory report from the American Petroleum Institute, which will be released today at 16:30 ET.

The consumer staples group also exhibited relative weakness, losing 0.6%. CVS Health (CVS 79.00, -2.96) weighed on the sector, dropping 3.6%, despite beating bottom-line estimates. The remaining sectors--financials (unch) and telecom services (-0.1%)--finished just a tick below their unchanged marks.

In the bond market, unequally distributed buying flattened the yield curve. The 10-yr yield finished three basis points lower at 2.28% while the 2-yr yield (1.27%) lost only one. Meanwhile, gold settled slightly higher, up 0.1% at $1,256.80/ozt, while the U.S. Dollar Index (98.84, -0.14) finished with a loss of 0.1%.

Investors did not receive any economic data on Monday, but auto and truck sales for the month of April were released throughout the day. The results were largely disappointing with American automakers General Motors (GM 33.20, -1.00) and Ford (F 10.92, -0.50) reporting declines of 6.0% and 7.2%, respectively.

Tomorrow, investors will receive several economic reports, including the weekly MBA Mortgage Applications Index at 7:00 ET, April ADP Employment Change (Briefing.com consensus 170,000) at 8:15 ET, April ISM Services (Briefing.com consensus 55.8) at 10:00 ET, and the FOMC rate decision at 14:00 ET.

Nasdaq Composite +13.2% YTD

S&P 500 +6.8% YTD

Dow Jones Industrial Average +6.0% YTD

Russell 2000 +3.1% YTD