Day Traders Diary

5/10/17

 The S&P 500 (+0.1%) finished at a new record close (just barely), but the headline is much more exciting than the reality. Wednesday's session was rather quiet at the macro level with the benchmark index hovering within a seven-point range. The Nasdaq (+0.1%) also eked out another record close, its third of the week, while the Dow (-0.2%) settled a step below its unchanged mark. The Russell 2000 outperformed the major U.S. indices, adding 0.6%.

Investors shrugged off President Trump's unexpected firing of FBI director James Comey, even though some mainstream media outlets suggested that the event may forestall tax reform efforts. The CBOE Volatility Index (VIX 9.99, +0.03, +0.3%) remained at a historically low level at Wall Street's closing bell.

Crude oil's 3.1% advance secured the energy sector's (+1.1%) spot atop the day's leaderboard. The commodity rallied following the Energy Information Administration's weekly inventory report, which showed a larger than expected draw in U.S. crude stocks for the week ended March 5 (5.3 million barrels actual vs 2.0 million barrels consensus). WTI crude settled at $47.28/bbl.

Out of the ten remaining sectors, seven--financials (+0.3%), materials (+0.4%), technology (+0.4%), consumer staples (+0.1%), utilities (+0.2%), telecom services (+0.3%), and real estate (+0.6%)--finished in the green. The top-weighted technology sector's positive performance was underpinned by chipmakers, which rallied around NVIDIA's (NVDA 121.29, +18.35) upbeat earnings report. The company spiked 17.8% after reporting better than expected earnings/revenues and issuing positive guidance. The PHLX Semiconductor Index added 2.1%.

Conversely, the three laggards--consumer discretionary (-0.3%), industrials (-0.4%), and health care (-0.3%)--received no help on the earnings front. Walt Disney (DIS 109.66, -2.41) and Priceline (PCLN 1824.77, -86.36) weighed on the consumer discretionary sector, losing 2.2% and 4.5%, respectively. Both companies reported better than expected earnings, but PCLN missed top-line estimates and issued disappointing guidance.

Allergan (AGN 229.72, -8.79) was the worst-performing component in the health care sector, tumbling 3.7%, despite reporting upbeat earnings/revenues and providing positive guidance. Analysts at Goldman did downgrade AGN shares to 'Neutral' from 'Buy' on Wednesday morning, which contributed to the company's poor performance. Biotech names also weighed on the sector, evidenced by the 0.4% decrease in the iShares Nasdaq Biotechnology ETF (IBB 291.89, -1.06).

In the industrial sector, Boeing (BA 183.18, -2.31) took center stage following reports that the company halted 737 MAX flights for engine inspections. BA shares finished lower by 1.3%.

U.S. Treasuries hovered just above their flat lines for the majority of Wednesday's session, however, a late-afternoon downtick took them into the red. The benchmark 10-yr yield settled one basis point higher at 2.41%.

On the data front, investors received April Import/Export Prices, the April Treasury Budget, and the weekly MBA Mortgage Applications Index:

Import prices excluding oil rose 0.3% in April after adding 0.2% in March. Export prices excluding agriculture increased 0.1% in April after rising 0.1% in March (revised from 0.2%).

The key takeaway from the report is that it won't alter the market's current assumptions about the likely path of the Fed's monetary policy.

The Treasury Budget for April showed a surplus of $182.4 billion versus a surplus of $106.5 billion for April 2016.

The Treasury Budget data is not seasonally adjusted, so the April surplus cannot be compared to the $176.2 billion deficit registered in March.

The weekly MBA Mortgage Applications Index increased 2.4% to follow last week's 0.1% downtick.

Tomorrow, market participants will receive April PPI (Briefing.com consensus 0.2%) and Initial Claims (Briefing.com consensus 242,000). Both reports will cross the wires at 8:30 ET.

Nasdaq Composite +13.9% YTD

S&P 500 +7.2% YTD

Dow Jones Industrial Average +6.0% YTD

Russell 2000 +3.1% YTD