Day Traders Diary

7/10/17

 The stock market kicked off the week with a rather uneventful, range-bound session that left the S&P 500 (+0.1%) just a step above its unchanged mark. The Nasdaq (+0.4%) outperformed the benchmark index while the Dow (unch) lagged, settling just a tick below its flat line. The major averages were hovering at their best marks of the day with less than 30 minutes to go in Monday's session, but a late bout of selling knocked them back to the middle of their trading ranges.

Sector movement was fairly modest throughout the first half of Monday's session, but things picked up a little bit in the afternoon. In general, cyclical sectors outperformed their countercyclical peers with growth-sensitive groups like technology (+0.8%), materials (+0.6%), energy (+0.3%), industrials (+0.2%), and consumer discretionary (+0.2%) settling in the green and defensive-oriented groups like health care (-0.3%), consumer staples (-0.7%), utilities (-0.2%), and telecom services (-0.5%) finishing in the red.

However, the cyclical vs countercyclical narrative doesn't fit Monday's session perfectly as the cyclical financial sector (-0.2%) struggled from the jump. The heavily-weighted group will remain a focal point this week as large-cap financial names like JPMorgan Chase (JPM 93.19, -0.66), Citigroup (C 67.65, -0.26), and Wells Fargo (WFC 55.59, -0.15) prepare to unofficially kick off earnings season with the release of their quarterly reports on Friday.

The top-weighted technology sector started the week with a solid performance that underpinned the broader market from virtually start to finish. The sector benefited from broad strength with chipmakers showing particular resolve, evidenced by the 1.2% increase in the PHLX Semiconductor Index. NVIDIA (NVDA 153.70, +6.94) led the semiconductor advance, jumping 4.7%, after the company's target price was raised to $200 at Needham.

Conversely, the consumer staples space registered a notable decline with Dow component Wal-Mart (WMT 73.23, -2.10) leading the retreat. The big-box retailer dropped 2.8% to a fresh three-month low with some traders citing Amazon's (AMZN 996.47, +17.71) third-annual Prime Day--a day in which the online retail giant offers Black Friday-types of deals to its Prime subscribers--as the catalyst to WMT's underperformance.

In the bond market, U.S. Treasuries settled Monday higher across the curve with the benchmark 10-yr yield dropping two basis points to 2.37%. Meanwhile, the U.S. Dollar Index (95.80, +0.02) finished flat.

Reviewing Monday's economic data, which was limited to May Consumer Credit:

The Consumer Credit report for May showed an increase of $18.4 billion while the Briefing.com consensus expected growth of $12.7 billion. The prior month's credit growth was revised to $12.9 billion from $8.1 billion.

Provided consumers weren't making greater use of revolving credit lines to cover basic needs due to a shortfall in income, this report can ostensibly be looked upon as a good sign for the economy since the expansion of credit is an integral contributor to economic growth. It is hard to say, though, because there isn't enough detail in the report and it tends to be subject to large revisions, which is why the market rarely shows much reaction to it.

Economic data will be limited again on Tuesday with investors receiving just two reports--May Wholesale Inventories (Briefing.com consensus 0.3%) and May JOLTS. Both reports will be released at 10:00 ET.

Nasdaq Composite +14.7% YTD
S&P 500 +8.4% YTD
Dow Jones Industrial Average +8.3% YTD
Russell 2000 +3.8% YTD