Day Traders Diary

10/5/17

It's been pretty quiet on Wall Street this week, but equities have continued creeping higher nonetheless, sending the major U.S. indices to new record highs. The stock market is currently on track to open Thursday's session slightly above yesterday's record close as the S&P 500 futures hover two points, or 0.1%, above fair value.

The major averages are all higher for the week coming into today's session, sporting week-to-date gains between 0.6% and 1.2%. The rally has been led by the S&P 500's health care (+1.4% WTD) and materials (+1.5% WTD) sectors while the top-weighted technology group (+0.2%) has underperformed, keeping the broader market's gain in check.

Tomorrow's release of the Employment Situation Report for September (Briefing.com consensus 75K) has been on investors' minds this week, however, its impact on December rate-hike expectations may be somewhat lessened in light of last week's comments from Fed Chair Yellen, which showed she's committed to a path of gradual rate hikes despite uncertainty in the area of inflation.

A number of Fed officials will provide comments today, including Fed Governor Powell, San Francisco Fed President Williams (non-FOMC voter), Philadelphia Fed President Harker (FOMC voter), and Kansas City Fed President George (non-FOMC voter). Mr. Powell is reported to be on President Trump's shortlist of Fed Chair candidates.

On the data front, investors will receive several economic reports this morning, including weekly Initial Claims (Briefing.com consensus 265K) at 8:30 ET, 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.

U.S. Treasuries are mixed in early action; the 2-yr yield is up one basis point at 1.48% while the benchmark 10-yr yield is down one basis point at 2.32%. Meanwhile, crude oil is up 0.2%, ticking above the $50.00/bbl mark, while the U.S. Dollar Index is higher by 0.1% at 93.42.

In U.S. corporate news:

• UPS (UPS 116.40, -2.60) and FedEx (FDX 216.50, -4.81): -2.2% apiece following news that Amazon (AMZN 967.49, +2.04) is testing its own delivery service.
• Constellation Brands (STZ 209.85, +8.67): +4.3% after reporting better-than-expected earnings and raising its earnings guidance for fiscal year 2018.
• Celgene (CELG 142.47, -4.05): -2.8% after Morgan Stanley downgraded CELG shares to 'Underweight' from 'Equal-Weight'.

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Thursday on a mixed note, but trading volume was light once again due to a continued holiday closure in China and another holiday in Hong Kong. Japan's Nikkei unch, India's Sensex -0.3%.
  • In economic data:
    • Australia's August trade surplus AUD989 million (expected surplus of AUD875 million; last surplus of AUD808 million). August Imports 0.0% month-over-month (last -1.0%) and August Exports +1.0% month-over-month (last -2.0%). August Retail Sales -0.6% month-over-month (expected 0.3%; last -0.2%)
    • India's September Nikkei Services PMI 50.7 (last 47.5)
  • In news:
    • Australia reported disappointing Retail Sales for August (actual: -0.6%; consensus: 0.3%), showing the sharpest month-over-month decline since late 2012.
    • Former Reserve Bank of Australia member John Edwards said the RBA could hike rates even if inflation remains below target.

• Major European indices trade near their flat lines while Spain's IBEX (+1.4%) outperforms after hitting a seven-month low yesterday. Germany's DAX -0.2%, France's CAC unch, UK's FTSE +0.3%.
  • In economic data:
    • Eurozone Retail PMI 52.3 (last 50.8)
    • UK's Housing Equity Withdrawal -GBP4.10 billion quarter-over-quarter (expected -GBP9.90 billion; last -GBP5.20 billion)
    • Swiss September CPI +0.2% month-over-month, as expected (last 0.0%); +0.7% year-over-year (consensus 0.6%; last 0.5%)
  • In news:
    • In last night's televised address, Catalan First Minister Carles Puigdemont said there is an obligation to apply the results of the independence referendum, but he left some wiggle room, saying he is seeking mediation with Madrid. The Catalan Parliament will meet on Monday and could declare independence at that time. Spain's Finance Minister Luis de Guindos was on the offensive, saying Catalan independence would be irrational, harmful to Catalonia, and that it will not happen.