Day Traders Diary

5/15/17

The major U.S. indices ended Monday in positive territory with the S&P 500 (+0.5%) and the Nasdaq (+0.5%) eking out record closes. The Dow (+0.4%) finished at tick behind its peers while the Russell 2000 (+0.8%) ended in the lead.

Investors shook off concerns surrounding this weekend's cyber security attack from the jump, pushing the stock market higher at the opening bell. From there, the energy sector carried the S&P 500 to its best mark of the day as crude oil rallied on news that Saudi Arabia and Russia are in favor of extending the original OPEC/non-OPEC supply cut agreement, which was scheduled to end in June, by another nine months. The benchmark index hovered near its session high for a while, but crude oil, and the energy sector, started to fade in the late afternoon, leading to some backtracking in the stock market.

WTI crude finished its day 2.1% higher at $48.86/bbl while the energy group (+0.6%) settled with the materials (+0.8%) and financials (+0.8%) sectors atop the day's leaderboard. Financials' solid performance was a positive signal for the broader market in light of the sector's recent struggles; over the last two months the sector has declined around 5.0%. Other influential sectors like health care (+0.6%) and technology (+0.6%) finished a tick above the broader market.

Johnson & Johnson (JNJ 126.99, +3.35) underpinned the health care group, jumping 2.7%, after the company's stock was upgraded to 'Overweight' from 'Neutral' at JP Morgan. In the tech group, chipmakers helped keep the sector ahead of the benchmark index, evidenced by the 1.5% increase in the PHLX Semiconductor Index. NVIDIA (NVDA 134.31, +6.42) led the semiconductor advance with a gain of 5.0%, extending its post-earnings rally to 30.5%.

The industrials (+0.5%), consumer staples (+0.4%), utilities (+0.4%), and real estate (+0.3%) sectors finished roughly in line with the broader market while the telecom services (-0.2%) and consumer discretionary (unch) groups lagged. Verizon (VZ 45.38, -0.46) weighed on the telecom services sector, losing 1.0%, amid reports that the company's network suffered outages in major U.S. metro areas on Monday. For its part, the consumer discretionary sector underperformed due to broad weakness within the sector.

Retailers deserve a mention given today's swing in the SPDR S&P 500 Retail ETF (XRT 42.07, -0.06). The XRT started the day solidly higher, adding as much as 1.0%, but sold off in the afternoon ahead of tomorrow morning's earnings reports from Home Depot (HD 157.33, +0.41) and TJX (TJX 76.90, -0.41). The XRT ended Monday with a slim loss of 0.1%

In the bond market, Treasuries ended slightly lower with the 10-yr yield climbing one basis point to 2.34%. Gold ($1,230.10/ozt) added 0.2% while the U.S. Dollar Index (98.81, -0.24) lost 0.2%.

On the data front, investors received May Empire Manufacturing and May Net Long-Term TIC Flows:

• The Empire Manufacturing Survey for May declined to -1.0 from the prior month's reading of 5.2. The Briefing.com consensus estimate was pegged at 7.5.
  • The key takeaway from this report is that manufacturing activity in the New York Fed region slowed in May, which will create a dent in some of the lofty second quarter growth expectations.
• Net Long-Term TIC Flows for May were $59.8 billion versus a revised $53.1 billion (from $53.4 billion) for April.

Tomorrow, investors will receive April Housing Starts (Briefing.com consensus 1.255 million) and April Industrial Production (Briefing.com consensus 0.3%). The two reports will cross the wires at 8:30 ET and 9:15 ET, respectively. 

• Nasdaq Composite +14.2% YTD
• S&P 500 +7.3% YTD
• Dow Jones Industrial Average +6.2% YTD
• Russell 2000 +2.7% YTD