Day Traders Diary

2/7/17

Equity futures endured another volatile night of trading, with the S&P 500 futures dropping as much as 1.3% below fair value.

The S&P 500 futures are currently 13 points, or 0.5%, below fair value, putting stocks on course to extend their losses for the week; the major stock indices hold week-to-date losses between 1.7% and 2.4% after reclaiming a sizable portion of their Monday declines on Tuesday.

Stocks have been all over the map this week as investors try to find the bottom of a big sell off that's pulled the S&P 500 6.2% below the record high it posted on January 26.

Overseas, equity indices in the Asia-Pacific region ended Wednesday mostly lower, although Japan's Nikkei (+0.2%) eked out a small victory, while the major European bourses have rallied following news that German Chancellor Angela Merkel's CDU/CSU has reached an agreement on a coalition government with SPD following a lengthy negotiation; Germany's DAX is up 0.7%, while the UK's FTSE and France's CAC sport gains of 1.0% and 0.5%, respectively.

Back in the U.S., Treasuries are under pressure this morning, giving back some of their gains for the week. The yield on the benchmark 10-yr Treasury note is up three basis points at 2.77%, but trades lower by five basis points for the week. Yields move inversely to prices.

On the data front, the weekly MBA Mortgage Applications Index, which was released earlier this morning, increased 0.7% to follow last week's 2.6% decline. Today's last economic report--December Consumer Credit (Briefing.com consensus $20.0 billion)--will be released at 3:00 PM ET.

West Texas Intermediate crude futures are down 0.5% at $63.06 per barrel, on track for their fourth consecutive decline, after the American Petroleum Institute reported that U.S. crude inventories declined by 1.1 million barrels last week. The official government figures will be released at 10:30 AM ET.

In U.S. corporate news:

• Walt Disney (DIS 108.20, +2.03): +1.9% after beating earnings estimates.
• Snap (SNAP 17.00, +2.95): +21.0% after reporting better-than-expected earnings, revenues, and daily active users (DAUs).
• Chipotle Mexican Grill (CMG 277.01, -27.39): -9.0% despite beating earnings estimates.
• Hasbro (HAS 89.00, -4.93): -5.3% after worse-than-expected revenues overshadowed better-than-expected earnings.
• Michael Kors (KORS 71.00, +5.56): +8.5% after beating earnings and revenue estimates.

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the midweek session on a mixed note. Japan's Nikkei +0.2%, Hong Kong's Hang Seng -0.9%, China's Shanghai Composite -1.8%, India's Sensex -0.3%.
  • In economic data:
    • New Zealand's Q4 Employment Change 0.5% quarter-over-quarter (expected 0.4%; last 2.2%). Q4 Unemployment Rate 4.5% (expected 4.7%; last 4.6%).
    • Australia's January's AIG Construction Index 54.3 (last 52.8)
    • Japan's Average Cash Earnings +0.7% year-over-year (expected 0.7%; last 0.9%). December Leading Index 107.9 (expected 108.1; last 108.3)
  • In news:
    • Reports from China indicate that banks have raised mortgage rates in several cities.
    • Separate headlines noted that China has filed new challenges with the World Trade Organization, complaining about U.S. tariffs on solar panels and washing machines.
    • Roughly 70% of South Korean businesses are expected to pay Lunar New Year bonuses.

• Major European indices trade on a higher note. France's CAC +0.5%, Germany's DAX +0.7%, UK's FTSE +1.0%.
  • In economic data:
    • UK's January Halifax House Price Index -0.6% month-over-month (expected 0.2%; last -0.8%); +2.2% year-over-year (consensus 2.4%; last 2.7%)
    • Germany's December Industrial Production -0.6% month-over-month (expected -0.4%; last 3.1%)
    • Italy's December Retail Sales -0.3% month-over-month (expected -0.4%; last 0.9%); -0.1% year-over-year (last 1.4%)
    • France's December trade deficit EUR3.50 billion (expected deficit of EUR4.90 billion; last deficit of EUR5.60 billion)
  • In news:
    • A coalition deal has finally been reached in Germany after lengthy negotiations. Chancellor Angela Merkel's party had to make considerable concessions, meaning SPD representatives will oversee the finance ministry, the foreign ministry, and the labor ministry.
    • Reports indicate that the European Union will ask the UK for a larger separation payment than what was agreed to last year.
    • UK's NIESR expects that domestic growth will hit 1.7% in 2018 and 1.9% in 2019.