Day Traders Diary

10/4/17

It was a quiet day on Wall Street, but that didn't stop the stock market from eking out yet another record close. The S&P 500 (+0.1%), the Dow (+0.1%), and the Nasdaq (unch) finished where they resided throughout the majority of the session--just a tick above their flat lines. However, the Russell 2000 slipped 0.3%, breaking its streak of eight consecutive record closes. 

Drugmaker Mylan (MYL 37.80, +5.27) surged 16.2% on Wednesday after the FDA approved its generic version of Teva Pharma's (TEVA 16.08, -2.74) multiple sclerosis drug Copaxone. Mylan's positive performance helped the S&P 500's influential health care sector (+0.5%) finish ahead of the broader market.

Like health care, the consumer discretionary sector (+0.5%) also outperformed on Wednesday with its top component by market cap--Amazon (AMZN 965.45, +8.35)--bouncing back from two days of losses. Netflix (NFLX 184.45, +5.26) also had a solid showing after UBS raised its target price to $225 from $190. AMZN and NFLX shares added 0.9% and 2.9%, respectively.

The majority of the S&P 500's 11 sectors finished in the green, however, the two most influential groups--technology and financials--did not.

Mega-cap names like Apple (AAPL 153.48, -1.00, -0.7%), Facebook (FB 168.42, -1.54, -0.9%), and Alphabet (GOOGL 966.78, -5.30, -0.6%) weighed on the tech space, overpowering gains from smaller components. Chipmakers managed to settle slightly ahead of the broader market though, evidenced by the PHLX Semiconductor Index (+0.2%).

As for financials, banks like JPMorgan Chase (JPM 96.36, -0.99) and Wells Fargo (WFC 54.96, -0.62) led the retreat, dropping around 1.0% apiece.

The energy sector (-0.1%) finished lower as well, weighed down by the price of crude oil--which dipped below $50.00/bbl despite an upbeat EIA inventory report; the Energy Information Administration reported that U.S. crude inventories declined by 6.0 million barrels (consensus -0.5 million barrels) for the week ended September 29.

In the bond market, U.S. Treasuries finished roughly flat with shorter-dated issues showing relative strength; the yield on the 2-yr Treasury note slipped one basis point to 1.47%. Meanwhile, the benchmark 10-yr yield settled unchanged at 2.33%.

Fed Chair Janet Yellen did speak on Wednesday, but made no mention of monetary policy.

Reviewing Wednesday's economic data, which included the September ADP Employment Change Report, the September ISM Services Index, and the weekly MBA Mortgage Applications Index:

• The ADP National Employment Report showed an increase of 135,000 in September (Briefing.com consensus 160,000) while the August reading was revised lower to 228,000 from 237,000.
• The ISM Services Index for September rose to 59.8 from an unrevised reading of 55.3 in August. The Briefing.com consensus expected a reading of 55.3.
  • The key takeaway from the report is that it gives the Federal Reserve some data-based ammunition to raise the fed funds rate in December since the Prices Index increased substantially and hit its highest level since February 2012, mirroring a big jump as well in the Prices Index for the ISM Manufacturing report.
• The weekly MBA Mortgage Applications Index decreased 0.4% to follow last week's 0.5% decline.

On Thursday, investors will receive the weekly Initial Claims Report (Briefing.com consensus 265K) at 8:30 ET, the August Trade Balance (Briefing.com consensus -$42.6 billion) also at 8:30 ET, and August Factory Orders (Briefing.com consensus +1.0%) at 10:00 ET.

• Nasdaq Composite +21.4% YTD
• Dow Jones Industrial Average +14.7% YTD
• S&P 500 +13.4% YTD
• Russell 2000 +11.1% YTD