Day Traders Diary

5/11/17

The major averages slipped out of the gate this morning following a generally disappointing wave of corporate news. However, the indices have been trending upward for the last couple of hours and currently trade near their best marks of the day. The S&P 500 is lower by 0.4%.

Retailers have weighed on the consumer discretionary sector (-0.7%) from the jump after Macy's (M 25.06, -4.28) reported worse than expected earnings/revenues and a 5.2% decline in comparable store sales. M shares have plunged 14.1% to a fresh five-year low while the SPDR S&P Retail ETF (XRT 43.11, -0.99) is down 2.2%.

Snap (SNAP 18.26, -4.72) reported its first earnings report as a public company, but the results were disappointing. The company missed top and bottom lines in addition to coming up short on daily active user growth. As a result, SNAP shares have plunged 20.3% in today's session, which puts them just a step above their IPO price of $17.00. Despite the disappointment, the technology sector (-0.4%) trades roughly in line with the broader market.

The financial sector (-0.3%) was lagging earlier, but has since returned to the middle of the sector standings. Wells Fargo (WFC 54.03, -0.69) prompted the early weakness after announcing plans to cut an additional $2 billion in expenses by the end of 2019. WFC shares still trade solidly lower, down 1.3%, but that loss represents only about half of its earlier decline.

For the second session in a row, crude oil has helped the energy sector (-0.1%) trade ahead of its peers. The commodity is up 1.1% at $47.86/bbl as investors continue to cheer yesterday's EIA inventory report, which showed a larger than expected draw for the week ended May 5 (5.3 million barrels actual vs 2.0 million barrels consensus). Outside of real estate (-0.8%) the remaining sectors trade roughly in line with the benchmark index.

In the Treasury market, U.S. sovereign debt trades modestly higher with the benchmark 10-yr yield (2.40%) lower by two basis points.

On the data front, investors received April PPI and Initial Claims:

April producer prices increased 0.5%, which is above the Briefing.com consensus of 0.2%. Core producer prices rose 0.4% while the Briefing.com consensus expected an increase of 0.2%.

The key takeaway from this report is that inflation pressures picked up for producers in April and that is going to create some concerns about a pass-through effect to consumers, particularly since there were price pressures noted across all four stages of intermediate demand.

The latest weekly initial jobless claims count totaled 236,000 while the Briefing.com consensus expected a reading of 242,000. Today's tally was below the unrevised prior week count of 238,000. As for continuing claims, they declined to 1.918 million from the revised count of 1.979 million (from 1.964 million).

The jobless claims data certainly fits well with the tight labor market narrative even if the subdued average hourly earnings growth seen in the April employment report does not.