Day Traders Diary

8/8/17

Wall Street went on a bit of a roller coaster ride on Tuesday as equities climbed to new record highs in the morning only to drop into the red in the late afternoon. The Dow broke its streak of nine consecutive record-high closes, ending the session lower by 0.2%. The S&P 500 (-0.2%) and the Nasdaq (-0.2%) finished in line with the industrial average.

The major averages opened Tuesday's session with modest losses, but quickly entered into a slow and steady climb that carried into the afternoon. At its peak, the S&P 500 held a gain of 0.4%. However, shortly after hitting said peak, the benchmark index started moving back towards its flat line as the heavily-weighted financial sector, which led the morning rally, hit a wave of selling pressure.

Selling began shortly after the Washington Post reported that North Korea has successfully produced a miniaturized nuclear warhead that can fit inside its missiles. However, the aforementioned move lower was more likely technical in nature considering it was led by the financial sector, which sharply reversed its slow and steady upward trend right at the 424.00 mark. At its best mark of the day (423.99), the financial space held a gain of 0.9%, but, in the end, the sector settled lower by 0.2%.

After retreating to their flat lines, the major averages then hit another wave of selling pressure, this one dragging them into negative territory, in the late afternoon after President Trump warned that North Korea will be "met with fire and fury like the world has never seen" if it continues to threaten nuclear action against the United States.

Investors have had a muted response to each of Pyongyang's 11 ballistic missile tests this year, but today's strong statement from Mr. Trump clearly upped the ante a bit. Still, today's move was very minor in the grand scheme of things and comes at a time when many investors are looking for an excuse to sell as equities hover at all-time highs.

The lightly-weighted utilities sector (+0.3%) was the only space to finish today's session in positive territory. The ten remaining groups settled with losses ranging from less than 0.1% to 0.9%.

Apple (AAPL 160.08, +1.27)--the largest component in the S&P 500 by market cap--put together a solid performance, helping the top-weighted technology sector (-0.1%) settle ahead of the broader market. The tech group held the top spot on today's leaderboard for much of the session, but slipped with the broader market in its late-afternoon slide. AAPL shares added 0.8% and closed at an all-time high.

On the earnings front, Michael Kors (KORS 42.25, +8.02) and Ralph Lauren (RL 88.53, +10.38) surged 21.5% and 13.3%, respectively, after both companies reported better than expected earnings. In addition, Michael Kors beat top-line estimates and issued above-consensus guidance. However, the SPDR S&P 500 Retail ETF (XRT 41.11, -0.22) still finished lower by 0.5%.

Treasuries moved lower in a curve-steepening trade, leaving the 2-yr yield (1.36%) and the 10-yr yield (2.28%) higher by one basis point and three basis points, respectively. Meanwhile, the U.S. Dollar Index (93.52, +0.22) climbed 0.2% and crude oil dropped 0.6% to $49.09/bbl.

Reviewing today's economic data, which was limited to the Job Openings and Labor Turnover Survey (JOLTS) for June:

The June Job Openings and Labor Turnover Survey showed that job openings increased to 6.163 million from a revised 5.702 million (from 5.666 million) in May.

On Wednesday, investors will receive several economic reports, including the weekly MBA Mortgage Applications Index at 7:00 ET, second quarter Productivity (Briefing.com consensus +0.5%) and Unit Labor Costs (Briefing.com consensus +1.5%) at 8:30 ET, and June Wholesale Inventories (Briefing.com consensus +0.6%) at 10:00 ET.

Nasdaq Composite +18.3% YTD

Dow Jones Industrial Average +11.8% YTD

S&P 500 +10.6% YTD

Russell 2000 +3.9% YTD