Day Traders Diary

10/11/17

Stocks posted a modest victory on Wednesday ahead of the third quarter earnings season, which will commence on Thursday morning. The three major indices--the S&P 500 (+0.2%), the Nasdaq (+0.3%), and the Dow (+0.2%)--settled the midweek session at fresh record highs, but the small-cap Russell 2000 underperformed, slipping 0.1%.

Investors received the minutes from the September FOMC meeting on Wednesday afternoon, but they contained little to no new information. In short, the minutes showed that the Fed favors staying on a path of gradual rate hikes, although there was growing concern that the factors keeping a lid on inflation may not be transitory after all.

Following the minutes, the CME FedWatch Tool places the chances of a December rate hike at 88.0%--virtually unchanged from the day prior.

The S&P 500's top-weighted technology sector (+0.5%) finished ahead of the broader market on Wednesday, thanks in large part to mega-cap names like Alphabet (GOOGL 1005.65, +17.85), Facebook (FB 172.74, +1.15), and Apple (AAPL 156.55, +0.65), which added 1.8%, 0.7%, and 0.4%, respectively. 

Chipmakers outperformed as well, sending the PHLX Semiconductor Index (+0.7%) higher for the 11th session in a row.

The influential health care sector (+0.2%) also moved higher on Wednesday, with Dow component Johnson & Johnson (JNJ 136.65, +2.75) leading the charge. The multinational conglomerate jumped 2.1% after submitting a new application to the FDA for its prostate cancer drug apalutamide.

On the down side, industrial giant General Electric (GE 23.07, -0.29) dropped for the third session in a row, losing 1.2%, after JPMorgan lowered its target price to $20 from $22. The industrial sector (unch), which houses GE, finished in negative territory.

The financial space (-0.1%) also underperformed as investors engaged in a little profit taking ahead of some important financial earnings. Heavyweights JPMorgan Chase (JPM 96.84, -0.29) and Citigroup (C 74.94, -0.24) will report their quarterly results on Thursday morning, marking the start of the third quarter earnings season.

In the bond market, the benchmark 10-yr Treasury note finished flat, leaving its yield unchanged at 2.35%.

Reviewing Wednesday's economic data, which included the August Jobs Openings and Labor Turnover Survey (JOLTS) and the weekly MBA Mortgage Applications Index:

• The August Job Openings and Labor Turnover Survey showed that job openings decreased to 6.08 million from a revised 6.14 million (from 6.17 million) in July.
• The weekly MBA Mortgage Applications Index decreased 2.1% to follow last week's 0.4% decline.

On Thursday, investors will receive the Producer Price Index for September (Briefing.com consensus +0.4%) at 8:30 ET, the weekly Initial Claims Report (Briefing.com consensus 255K) also at 8:30 ET, and the Treasury Budget for September at 14:00 ET.

• Nasdaq Composite +22.7% YTD
• Dow Jones Industrial Average +15.7% YTD
• S&P 500 +14.1% YTD
• Russell 2000 +11.0% YTD