Day Traders Diary

3/6/18

Stocks finished modestly higher on Tuesday, notching their third consecutive victory, following a hard-fought battle between the bulls and the bears. The S&P 500 advanced 0.3%, while the Nasdaq Composite climbed 0.6% and the Dow Jones Industrial Average closed flat. The small-cap Russell 2000 outperformed, rallying 1.0%.

Investors continued weighing the possibility of a trade war on Tuesday, but pushback from some senior Republicans regarding tariffs on steel and aluminum imports, which President Trump pledged to implement last Thursday, helped ease concerns. House Speaker Paul Ryan (R-WI) encouraged the White House to narrow the focus of its plan, saying the current proposal--a 25% tariff on steel imports and a 10% tariff on imported aluminum--is too broad and leaves the U.S. open to retaliation.

Meanwhile, on the Korean Peninsula, reports indicated that North Korea and South Korea will hold their first summit in more than a decade in late April. North Korea is also reportedly open to discussing the end of its nuclear weapons program as long as the ruling regime is guaranteed security in return. However, investors remained skeptical as North Korea has a poor track record of keeping its promises.

U.S. equities opened Tuesday's session modestly higher following a positive overnight performance from overseas markets, but struggled to find sturdy ground. The S&P 500 drifted near its unchanged mark throughout the session (2721)--adding no more than 0.4% and limiting its loss to 0.4%--as it eyed its 50-day simple moving average (2738) off in the distance. The benchmark index never actually challenged the key technical level, backing away each time it looked as if it might make a run.

Nine of eleven S&P 500 sectors finished the session in positive territory, with the lightly-weighted materials space (+1.1%) leading the charge. The consumer discretionary sector (+0.7%) also outperformed despite a 4.5% decline in the shares of Target (TGT 71.79, -3.35). The retailer followed up a slightly disappointing fourth quarter earnings report with news that it will raise its minimum wage to $12 an hour (from $11) this spring and hopes to reach $15 an hour by 2020.

On the flip side, the utilities sector (-1.4%) finished at the bottom of the sector standings, giving back about three quarters of its Monday advance. The heavily-weighted health care sector also underperformed, closing with a loss of 0.1%.

Outside of the equity market, U.S. Treasuries finished Tuesday flat, leaving the benchmark 10-yr yield at 2.88%. Meanwhile, the U.S. Dollar Index closed below 90.00 for the first time in a week, dropping 0.4% to 89.57, and West Texas Intermediate crude futures finished flat at a price of $62.60 per barrel.

Investors received just one economic report on Tuesday, January Factory Orders, which showed a larger-than-expected decline (-1.4% actual vs -1.3% Briefing.com consensus). The key takeaway from the report is that it wasn't so much a reflection of a business downturn as it was a case of some understandable softness on the back of an extended pickup in new order activity.

• Nasdaq Composite: +6.8% YTD
• S&P 500: +2.0% YTD
• Dow Jones Industrial Average: +0.7% YTD
• Russell 2000: +1.7% YTD

Headlines provided by Briefing.com