Day Traders Diary

10/2/17

The stock market kicked off the week with yet another solid performance that left the Dow (+0.7%), the S&P 500 (+0.4%), the Nasdaq (+0.3%), and the small-cap Russell 2000 (+1.3%) at new record highs. Monday's advance marked the third-consecutive record high close for the S&P 500 and the seventh in a row for the Russell 2000.

Although the market largely shook off Sunday night's massive shooting in Las Vegas, it was the main topic of conversation in the financial media on Monday. From the 32nd floor of the Mandalay Bay Resort, a lone gunman took aim--firing across the Las Vegas Strip--at a country music concert, killing at least 58 people and injuring over 500 others.

Market participants took the devastating attack, which is the deadliest shooting in U.S. history, as an isolated incident given that authorities do not believe the gunman was connected to any militant groups. MGM Resorts (MGM 30.77, -1.82), which owns and operates Mandalay Bay, did sell off sharply, however, settling with a loss of 5.6%.

On Wall Street, financial and health care stocks were in demand on Monday, helping to alleviate relative weakness from mega-cap names like Apple (AAPL 153.81, -0.31), Alphabet (GOOGL 967.47, -6.25), and Amazon (AMZN 959.19, -2.16)--all three of which have paced the stock market's 2017 campaign thus far. 

The heavily-weighted financial (+0.9%) and health care (+1.0%) sectors finished just a tick behind the lightly-weighted materials sector (+1.1%) at the top of the day's leaderboard. The financial sector's positive performance was particularly notable as it extended the group's September rally; financials have climbed 9.4% since September 7.

At the opposite end of the leaderboard, the real estate (-0.4%), consumer staples (-0.2%), and telecom services (-0.1%) groups finished with modest losses. The energy space (unch) also settled in the red as the price of crude oil dropped 2.1% to $50.58/bbl following reports of decreased OPEC production-cut compliance. 

A strengthening U.S. dollar also worked against the commodity; the U.S. Dollar Index climbed 0.6% to 93.47. The greenback was particularly strong against the euro, jumping 0.7% to 1.1735, following Sunday's contentious independence referendum in Spain. 

The people of Catalonia overwhelmingly voted to split from Spain on Sunday, but Prime Minister Mariano Rajoy refused to acknowledge the vote, which was outlawed by the central government in Madrid. Reports indicate that nearly 900 voters were injured by police, who attempted to shut down polling stations in the region.

In the U.S. bond market, Treasuries finished Monday modestly lower, sending yields into the green. The 10-yr yield climbed one basis point to 2.34%.

Reviewing Monday's economic data, which included the September ISM Index and August Construction Spending:

• The ISM Index for September rose to 60.8 from an unrevised reading of 58.8 in August while the Briefing.com consensus expected a downtick to 57.8.
  • The key takeaway from the report, which stands at its highest level since May 2004, is that it was accompanied by the highest reading for the Prices Index (71.5) since May 2011. That understanding will feed a belief that the Federal Reserve is apt to raise the fed funds rate again at its December FOMC meeting.
• The Construction Spending report for August rose 0.5% while the Briefing.com consensus expected an increase of 0.2%. The prior month's reading was revised to -1.2% from -0.6%.
  • The key takeaway from the report is that overall construction spending remains modest and an inhibitor of stronger real GDP growth.

On Tuesday, the economic calendar will be limited to auto and truck sales for the month of September, which will be released throughout the day.

• Nasdaq Composite +21.1% YTD
• Dow Jones Industrial Average +14.1% YTD
• S&P 500 +13.0% YTD
• Russell 2000 +11.2% YTD