Day Traders Diary



Wall Street advanced to new record highs for the second day in a row on Wednesday, solidifying a solid start to the new year.

The Nasdaq climbed 0.8% to 7065.53, the S&P 500 jumped 0.6% to 2713.06, the Dow Jones Industrial Average advanced 0.4% to 24922.68, and the Russell 2000 hopped 0.2% to 1552.55. All four indices finished at new all-time highs, with the tech-heavy Nasdaq extending its 2018 gain to 2.4%. The S&P 500 is up 1.5% after the first two sessions of the new year.

Equities opened Wednesday's session just a tick above Tuesday's closing levels, but buyers soon took control, pushing the major stock indices higher through the late morning. The bulls hit pause ahead of the afternoon release of the minutes from the December FOMC meeting, which showed that most members backed a continued path of gradual rate hikes.

Some FOMC members even saw the possibility for more aggressive monetary policy depending on economic growth resulting from the GOP's tax overhaul--which President Trump signed into law two weeks ago. Many Fed officials believe that the tax cuts will boost consumer and capital spending, but there's uncertainty surrounding the magnitude of the growth.

The equity market resumed its upward trend following the minutes, finishing the day at its session high, while the Treasury market gave back some of its opening gains. The yield on the benchmark 10-yr Treasury note finished lower by two basis points at 2.45%, while the 2-yr yield climbed one basis point to 1.93%. Yields move inversely to prices.

Energy shares led the rally on Wall Street as West Texas Intermediate crude futures climbed 2.1% to $61.63 per barrel--which marks their best close since December 2014. Anti-government protests in oil-rich Iran helped fuel the commodity's advance, even though the demonstrations aren't expected to affect production. The S&P 500's energy sector added 1.5%.

The heavily-weighted technology and health care sectors were the next-best performing groups, adding 1.1% and 1.0%, respectively, while the other advancing sectors added between 0.1% and 0.7%. Within the tech space, chipmakers had another solid day overall, extending the PHLX Semiconductor Index's week-to-date gain to 4.5%, but Intel (INTC 45.26, -1.59) did not.

INTC shares lost 3.4% in reaction to reports that a design flaw in Intel's processor chips has forced a significant redesign of kernels for the Windows and Linux operating systems. Intel issued a statement refuting the claims in the late afternoon, which helped INTC shares pare some of their losses before the closing bell.

Only three of eleven sectors finished the midweek session in the red--consumer staples (-0.1%), utilities (-0.8%), and telecom services (-2.2%)--but their impact was modest as they comprise just a little more than 10.0% of the broader market combined.

Elsewhere, the Euro Stoxx 50 (+0.6%) ended a six-session losing streak and the major indices in the Asia-Pacific region also finished in the green. China's Shanghai Composite (+0.6%) paced the advance in Asia while Japan's Nikkei remained closed for a holiday.

Reviewing Wednesday's economic data, which included the ISM Manufacturing Index for December, Construction Spending for November, and the weekly MBA Mortgage Applications Index:

  • The ISM Index for December rose to 59.7 from an unrevised reading of 58.2 in November, while the consensus expected a reading of 58.0.
    • The key takeaway from the report is that growth in December was fueled by increases in eight out of ten index categories with New Order growth (+5.4 to 69.4) leading the way. The December increase leaves the index not far from its 2017 high of 60.8 that was recorded in the September reading.
  • The Construction Spending report for November increased 0.8%, while the consensus expected an increase of 0.7%. The prior month's increase was lowered to 0.9% from 1.4%.
    • The key takeaway from the report--and the downward revision to the October figure--is that construction spending is not sending signals pointing to notable acceleration in overall GDP growth.
  • The weekly MBA Mortgage Applications Index decreased 2.8% to follow last week's 4.9% decline.

On Thursday, investors will receive two economic reports--ADP Employment Change for December ( consensus +190K) and weekly Initial Claims ( consensus 239K). The two reports will be released at 8:15 AM ET and 8:30 AM ET, respectively.

  • Nasdaq Composite: +2.4% YTD
  • S&P 500: +1.5% YTD
  • Russell 2000: +1.1% YTD
  • Dow Jones Industrial Average: +0.8% YTD

All comments contained herein are for informational purposes only, and should not be considered as a solicitation to buy or sell any security. The firm does not guarantee the accuracy or completeness of the information or make any warranties regarding results from it's usage.