Day Traders Diary

7/18/17

For the first time since June 8, the tech-heavy Nasdaq (+0.5%) advanced to a new record high on Tuesday as tech stocks continued their bullish run. The S&P 500 (+0.1%) also finished at a new record high while the Dow and the small-cap Russell 2000 underperformed, dropping 0.3% apiece. The three major averages settled the session at their best marks of the day.

Only five of the S&P 500's eleven sectors settled in positive territory, but, luckily for the broader market, one of those groups was the top-weighted technology space (+0.5%). Mega-cap names like Facebook (FB 162.86, +3.13) and Alphabet (GOOGL 986.95, +10.99) paced the sector's advance, adding 2.0% and 1.1%, respectively, with FB notching a new all-time high.

Today's win marks the eighth in a row for the technology sector, which has fully recovered from last month's swoon. For the year, the tech space trades comfortably ahead of its peers with a year-to-date gain of 22.1%. For comparison, the S&P 500 holds a year-to-date gain of 9.9% and the health care sector, which hovers in second place on the 2017 leaderboard, is up 15.9% on the year.

Meanwhile, the consumer discretionary sector (+0.4%) also put together a relatively solid performance, leaning on Amazon (AMZN 1024.38, +14.34) to overcome losses from most components. AMZN shares advanced 1.4% to a new all-time high. The lightly-weighted utilities group (+0.3%) was the only other sector to settle ahead of the broader market.

The influential health care group (+0.1%) eked out a narrow victory, thanks in part to the solid performances of Johnson & Johnson (JNJ 134.46, +2.31) and UnitedHealth (UNH 186.85, +0.50). The two companies advanced 1.8% and 0.3%, respectively, after reporting better than expected earnings and issuing upbeat guidance.

On a related note, Senate Majority Leader Mitch McConnell decided to pave a new direction for the upper chamber on Monday evening, trimming aspirations to repeal and replace the Affordable Care Act in favor of a straight repeal with no immediate replacement. However, three centrist-Republican Senators publicly opposed the idea on Tuesday, sending Republican leaders back to the drawing board.

Back on Wall Street, earnings played a role in the heavily-weighted financial sector's underperformance as Goldman Sachs (GS 223.31, -5.95) and Bank of America (BAC 23.90, -0.12) beat earnings and revenue estimates, but failed to live up to the bullish five-week run that financials enjoyed ahead of earnings season. The financial sector ended the day lower by 0.3%.

Like financials, the energy sector (-0.5%) also had a rough showing, despite a positive performance from crude oil, which climbed 0.8% to $46.40/bbl. The commodity benefited from reports that Saudi Arabia is considering a reduction in its crude exports, in addition to a weakening U.S. Dollar; the U.S. Dollar Index (94.42, -0.50) dropped 0.5% to settle at an 11-month low.

As for the remaining laggards, the telecom services group (-1.0%) was the weakest performer while the industrials (-0.3%), materials (-0.4%), and real estate (-0.1%) spaces settled with more moderate losses.

Reviewing Tuesday's economic data, which included June Export/Import Prices and the July NAHB Housing Market Index:

Import prices excluding oil rose 0.1% in June after finishing flat in May. Export prices excluding agriculture were unchanged in June (0.0%) after declining 0.4% in May (from -0.6%).

The key takeaway from the report is that it doesn't change the market's understanding -- or the Fed's -- that inflation readings remain low.

The NAHB Housing Market Index for July declined to 64 (Briefing.com consensus 67) from a revised reading of 66 in June (from 67).

On Wednesday, investors will receive the weekly MBA Mortgage Applications Index and June Housing Starts (Briefing.com consensus 1160K) at 7:00 ET and 8:30 ET, respectively.

Nasdaq Composite +17.9% YTD

S&P 500 +9.9% YTD

Dow Jones Industrial Average +9.2% YTD

Russell 2000 +5.2% YTD