Day Traders Diary

10/9/17

 Equities opened the week on the back foot, ticking slightly below the record highs they posted at the tail end of last week. The Nasdaq (-0.2%) and the Dow (-0.1%) finished roughly in line with the S&P 500 (-0.2%) while small caps underperformed, sending the Russell 2000 lower by 0.4%.

The S&P 500's technology sector (+0.2%) got off to a relatively solid start on Monday, but unraveled a bit in the afternoon amid a modest sell off in the broader market. Still, the group managed to eke out a slim victory, something that only four other sectors--energy (+0.3%), utilities (+0.1%), real estate (+0.1%), and materials (unch)--were able to do.

On the flip side, the health care sector (-0.7%) finished at the bottom of the sector standings as just about all of its components finished in the red. Medtronic (MDT 76.93, -2.88) showed particular weakness, dropping 3.6%, after the company said on Friday evening that Hurricane Maria could negatively impact its fiscal second quarter results by $250 million.

The financial group (-0.4%) also tumbled on Monday ahead of the start of earnings season, which will unofficially kick off later this week when several financial heavyweights, including JPMorgan Chase (JPM 96.41, -0.51), Citigroup (C 75.39, -0.25), Bank of America (BAC 25.85, -0.36), and Wells Fargo (WFC 55.14, -0.44), release their quarterly results.

According to FactSet, S&P 500 earnings are expected to increase just 2.8%, down from an estimated growth rate of 7.5% on June 30. Insurance claims associated with hurricane-related damages have been the biggest driver of the downward revision. As a result, the financial sector--which houses insurers--is projected to report the widest year-over-year decline in earnings.

Meanwhile, the energy group is projected to deliver year-over-year growth in excess of 100%, which is by far the largest anticipated gain among the 11 sectors.

Within the Dow, General Electric (GE 23.43, -0.96) plunged 3.9% on Monday after announcing over the weekend that several top executives will be leaving the company, including longtime CFO Jeff Bornstein. The changes are a part of new CEO John Flannery's attempt to reboot the company's business. GE shares have dropped 25.9% this year.

On a positive note, Wal-Mart (WMT 80.53, +1.53) was the Dow's top performer, climbing 1.9%, following a positive mention in this weekend's Barron's magazine and news that the company is launching a new return service that will allow customers to return items in about 30 seconds.

The bond market was closed in observance of Columbus Day, leading to lighter-than-usual volume on the New York Stock Exchange. Only 620 million shares changed hands at the NYSE floor, a ways below the 50-day simple moving average of 805 million.

Investors did not receive any economic data on Monday.

Tuesday's lone economic release--the September NFIB Small Business Optimism Index--will cross the wires at 7:00 ET.