Day Traders Diary

1/2/18

U.S. equities began 2018 on a positive note, jolted by a sense of optimism for the new year.

The major stock indices mostly reclaimed the losses registered ahead of the extended New Year's weekend, with the tech-heavy Nasdaq (+1.5%) settling above the 7000 mark for the first time ever. The S&P 500 (+0.8%) also finished at a new record high, while the Dow Jones Industrial Average (+0.4%) underperformed.

Beneath the eye-catching headlines of new all-time highs, Tuesday's session was rather dull as trading volume remained relatively light following the holidays; just 815 million shares changed hands at the New York Stock Exchange. Equities registered most of their gains at the opening bell and, outside an uptick in the final minutes, trended sideways for the rest of the day.

Advancing stocks outnumbered declining stocks by 1.6 to 1, and, more importantly, the size of the gains easily outweighed the magnitude of the losses. The consumer discretionary, technology, health care, energy, and materials sectors--which comprise around 60% of the broader market combined--climbed more than 1.0% apiece.

Meanwhile, the consumer staples, utilities, telecom services, and real estate groups--which make up just 16% of the broader market combined--lost between 0.6% and 0.9%. The heavily-weighted financial sector also finished in the red, but its loss was modest at 0.1%.

Chipmakers had a solid day, bouncing back from some profit taking at the end of 2017; the PHLX Semiconductor Index jumped 2.8%. Names like Advanced Micro (AMD 10.98, +0.70) and Micron Technology (MU 43.67, +2.55) were among the top performers, adding 6.8% and 6.2%, respectively.

Retailers also put together a positive performance, evidenced by the 1.8% increase in the SPDR S&P Retail ETF (XRT 46.01, +0.83). Target (TGT 67.63, +2.38) tacked on 3.7% amid speculation that Amazon (AMZN 1189.01, +19.54) could make a bid for the big-box retailer sometime this year.

Elsewhere, the Euro Stoxx 50 (-0.5%) posted its sixth consecutive loss despite an in-line reading for the December Eurozone Manufacturing PMI (60.6). Conversely, equity indices in the Asia-Pacific region finished Tuesday on a mostly higher note, with Hong Kong's Hang Seng (+2.0%) pacing the advance.

Outside the equity markets, U.S. Treasury yields climbed across the curve, with the benchmark 10-yr yield jumping six basis points to 2.47%, and West Texas Intermediate crude futures held steady at $60.36 per barrel as anti-government protests in Iran continued. The U.S. Dollar Index tumbled 0.5% to 91.55, hitting a three-month low.

Investors did not receive any economic data on Tuesday, but they will receive several economic reports on Wednesday, including the weekly MBA Mortgage Applications Index at 7:00 ET and both the ISM Manufacturing Index for December (Briefing.com consensus 58.0) and Construction Spending for November (Briefing.com consensus +0.7%) at 10:00 ET.

In addition, the minutes from the December FOMC meeting will cross the wires at 14:00 ET, and December auto and truck sales will be released throughout the day.

• Nasdaq Composite: +1.5% YTD
• Russell 2000: +0.9% YTD
• S&P 500: +0.8% YTD
• Dow Jones Industrial Average: +0.4% YTD