Day Traders Diary

5/3/17

The major averages held modest losses throughout Wednesday's session, but a late-afternoon uptick left the S&P 500 (-0.1%) just short of its unchanged mark. The Dow (unch) eked out a small win while the tech-heavy Nasdaq (-0.4%) and the domestically-oriented Russell 2000 (-0.6%) underperformed.

While there were some flaws in Apple's (AAPL 147.06, -0.45) latest earnings report--the number of iPhone units sold was below expectations, iPad unit sales fell below 10 million for the first time in six years, and sales in China were down 14.0% year-over-year--the tech giant largely overcame those concerns to end just a step below the broader market. The company's above-consensus earnings and upcoming iPhone 8 release helped keep losses in check.

With Apple not performing at the top of its game, the top-weighted technology sector (-0.1%) turned to Alphabet (GOOGL 948.45, +11.36) and chipmakers for support. GOOGL finished higher by 1.2% while the PHLX Semiconductor Index added 0.3% on First Solar's (FSLR 33.91, +3.59) better than expected earnings/revenues and upbeat guidance. FSLR shares spiked 11.8%.

Lightly-weighted sectors like real estate (-1.3%), telecom services (-0.6%), and materials (-1.0%) populated the bottom of the day's leaderboard with the weakness in the materials group owed to the commodity market's poor performance; gold (-0.8%), silver (-1.4%), and copper (-4.2%) all settled with solid losses. However, crude oil was able to eke out a win despite the EIA reporting a smaller than expected draw for the week ended April 28 (0.9 million actual vs 2.0 million consensus). The energy sector made the most of the relatively upbeat performance, adding 0.3%.

Media names weighed on the consumer discretionary sector (-0.6%) in today's session after Hulu announced a new live TV service for $40/month. Twenty-First Century Fox (FOX 28.35, -1.50) showed the widest decline, losing 5.0%, while Dow component Walt Disney (DIS 111.62, -2.75) tumbled 2.4%. The remaining laggards--health care and utilities--closed with losses of 0.4% and 0.5%, respectively.

On the flip side, the consumer staples (+0.1%) and financials (+0.6%) spaces outperformed. The consumer staples group received some help from Mondelez International (MDLZ 45.03, +1.29) and Estee Lauder (EL 91.30, +3.82), both of which beat earnings estimates. Meanwhile, the financial sector benefited from Allstate's (ALL 84.93, +3.10) better than expected earnings and revenues. The industrial sector (+0.1%) was the last sector to finish in positive territory.

The FOMC voted unanimously to leave the fed funds target range unchanged at 0.75%-1.00%, as expected, with the accompanying policy statement providing little new information. The market still expects the Fed to raise rates at its June meeting with the CME FedWatch Tool assigning an implied probability of 70.7% to said event. Treasuries settled generally lower with the 2-yr yield (1.29%) and the 10-yr yield (2.31%) adding three basis points apiece.

Market participants received a number of economic reports on Wednesday, including April ADP Employment Change, the April ISM Services Index, and the weekly MBA Mortgage Applications Index:

The ADP National Employment Report showed an increase of 177,000 in April (Briefing.com consensus 170,000) while the March reading was revised lower to 255,000 from 263,000.

The ADP reading precedes Friday's more influential Employment Situation Report for April, which the Briefing.com consensus expects will show the addition of 180,000 nonfarm payrolls. The Employment Situation Report for March indicated that nonfarm payrolls increased by 98,000.

The ISM Services Index for April rose to 57.5 from an unrevised reading of 55.2 in March while the Briefing.com consensus expected an uptick to 55.8.

The key takeaway from the report is that the non-manufacturing side of the economy, which accounts for a much larger slice of GDP than the manufacturing sector does, continues to hum along in an expansion mode, with new order activity driving the acceleration in April.

The weekly MBA Mortgage Applications Index decreased 0.1% to follow last week's 2.7% increase.

Tomorrow, investors will receive a slew of economic data, including March Trade Balance (Briefing.com consensus -$44.4 billion), Initial Claims (Briefing.com consensus 246,000), and the preliminary reading of first quarter Productivity (Briefing.com consensus 0.1%) and Unit Labor Costs (Briefing.com consensus 2.6%) at 8:30 ET and March Factory Orders (Briefing.com consensus 0.4%), which will cross the wires a little later at 10:00 ET.

Nasdaq Composite +12.8% YTD

S&P 500 +6.7% YTD

Dow Jones Industrial Average +6.1% YTD

Russell 2000 +2.5% YTD