Day Traders Diary

9/12/17

Stocks moved higher for the second day in a row on Tuesday, but conviction was much more subdued than it was on Monday when the major averages rose over 1.0% apiece. The S&P 500 climbed 0.3% to notch its second record-high close of the week, while the Nasdaq (+0.3%) and the Dow (+0.3%) each managed to notch their first. Small caps outperformed, sending the Russell 2000 higher by 0.6%.

The biggest event of the day was Apple's (AAPL 160.82, -0.68) annual product unveiling, in which the tech giant showed off three new iPhones, including the iPhone 8, the iPhone 8 Plus, and the high-end iPhone X--which CEO Tim Cook called "the biggest leap forward since the original iPhone." Apple also introduced a new 4K Apple TV and its Apple Watch Series 3, which is the first series to include LTE-capability, allowing users to make phone calls and stream music without hauling a phone.

On the whole, the product event provided little new information as many of the details had been leaked to the public beforehand. Nonetheless, Apple shares were volatile following the event's afternoon kick off, first surging from their flat line to a new session high ($163.96/share, +1.5%) and then dropping sharply to a new session low ($158.77/share, -1.7%). In the end, AAPL shares finished lower by 0.4%.

Unsurprisingly, the top-weighted technology sector--and the broader market to some degree--mimicked Apple's volatility as the company is the largest component by market cap within the sector (and the S&P 500 in general). The tech group ended Tuesday's session a tick above its flat line (+0.1%), but held a gain of 0.4% at its best mark of the day and a loss of 0.4% at its worst. 

Conversely, the influential financial space (+1.2%) proved to be pillar of strength on Tuesday, settling comfortably above the broader market for the second time this week. The sector benefited from a curve-steepening trade within the Treasury market, which sold off once again as investors dialed up their appetite for more risky assets--like equities. The yield on the benchmark 10-yr Treasury note climbed five basis points to 2.17%, hitting its best level in over a week, while the 2-yr yield ticked up just two basis points to 1.33%.

Like financials, the lightly-weighted telecom services space (+1.4%) comfortably outperformed the broader market, but the remaining advancers finished with more modest gains, raging from 0.1% to 0.8%. The consumer discretionary sector settled in the middle of said range (+0.4%), overcoming a disappointing performance from McDonald's (MCD 156.33, -5.20), which tumbled 3.2% on the heels of some cautious commentary from market research firm M Science. 

At the opposite end of the sector standings, the rate-sensitive utilities and real estate sectors struggled amid the increase in interest rates. The two groups were the only sectors to finish Tuesday in the red, registering sizable losses of 1.8% and 1.2%, respectively.

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

• The July Job Openings and Labor Turnover Survey showed that job openings increased to 6.170 million from a revised 6.116 million (from 6.163 million) in June.

On Wednesday, investors will receive several economic reports, including the weekly MBA Mortgage Applications Index at 7:00 ET, the August Producer Price Index (Briefing.com consensus +0.3%) at 8:30 ET, and the August Treasury Budget at 14:00 ET.

• Nasdaq Composite +19.9% YTD
• Dow Jones Industrial Average +11.9% YTD
• S&P 500 +11.5% YTD
• Russell 2000 +4.9% YTD