Day Traders Diary

4/3/18

U.S. equities rebounded on Tuesday, reclaiming a little more than half of their Monday losses in a broad-based rally. The S&P 500 advanced 1.3% to 2614.45, the Dow Jones Industrial Average climbed 1.7% to 24033.36, and the Nasdaq Composite jumped 1.0% to 6941.28. 

The major averages bounced around with modest gains for much of the session, but shot to new highs in the late afternoon following a headline that the White House doesn't have any specific plans for action against Amazon (AMZN 1392.05, +20.06). The news wasn't really new -- Press Secretary Sarah Huckabee Sanders made a similar statement last week -- but, nonetheless, it served to temper fears following critical comments from President Trump, who alleges the company is taking advantage of the U.S. Post Office and gets unfair tax treatment.

Amazon jumped following the headline, and the broader market came along with it -- thanks in part to some short-covering activity. AMZN shares, which were down as much as 1.2% on Tuesday, finished higher by 1.5%, while the S&P 500 finished near its session high and about 25 points above its 200-day simple moving average (2590). The benchmark index settled below the key technical level for the first time since June 2016 on Monday.

All 11 S&P sectors finished Tuesday in positive territory, with energy (+2.1%) being the top performer as WTI crude futures rebounded from a two-week low, climbing 0.7% to $63.45 per barrel. The financials (+1.4%), consumer discretionary (+1.2%), industrials (+1.4%), materials (+1.5%), health care (+1.5%), and consumer staples (+1.4%) sectors also finished with solid gains, while the lightly-weighted utilities (+0.4%) and real estate (+0.3%) sectors lagged.

The most influential group -- information technology -- finished higher by 1.0%, but struggled up until the late-afternoon rally, losing as much as 0.7% earlier in the session. The group's turnaround helped boost investor sentiment, which has suffered in recent weeks amid a lack of sector leadership; the technology group has underperformed as of late after pacing last year's rally and a once positive start to 2018. Likewise, the financial sector's upbeat performance was also notable tailwind for investor sentiment.

Investors did not receive any economic data on Tuesday, but automakers did report sales figures for the month of March. General Motors (GM 36.94, +1.18), Ford Motor (F 11.15, +0.29), and Fiat Chrysler (FCAU 21.79, +1.84) advanced 3.3%, 2.7%, and 9.2%, respectively, after all three reported year-over-year increases in sales; Fiat Chrysler's sales increased 14.0%, while GM's and Ford's sales increased 16.0% and 3.4%, respectively. Electric automaker Tesla (TSLA 267.53, +15.05) also climbed, adding 6.0%, after reporting Model 3 production just below its target and reaffirming its production outlook.

In the bond market, U.S. Treasuries tumbled on Tuesday, pushing yields higher across the curve; the yield on the benchmark 10-yr Treasury note climbed five basis points to 2.78%, rebounding from an eight-week low, while the 2-yr yield also advanced five basis points, closing at 2.29%.

Looking ahead, investors will receive several reports on Wednesday, including the weekly MBA Mortgage Applications Index at 7:00 AM ET, the ADP Employment Change report for March (Briefing.com consensus 203K) at 8:15 AM ET, and both February Factory Orders (Briefing.com consensus +1.8%) and the ISM Services Index for March (Briefing.com consensus 59.0) at 10:00 AM ET.

• Nasdaq Composite: +0.6% YTD
• S&P 500: -2.2% YTD
• Dow Jones Industrial Average: -2.8% YTD
• Russell 2000: -1.5% YTD