Day Traders Diary

4/30/18

Stocks got off to a decent start on Monday, but ended the session on a lower note. The major averages finished at their worst marks of the day due to a sharp bout of selling in the final minutes; the S&P 500 and the Nasdaq settled with losses of 0.8% apiece, while the Dow dropped 0.6%.

Losses were broad-based on Monday, with all 11 S&P sectors finishing in negative territory. Telecom services was the worst-performing group, losing 2.7%, following news that Sprint (S 5.61, -0.89) and T-Mobile US (TMUS 60.51, -4.01) have agreed to an all-stock merger; the deal is aimed at creating a larger carrier to better compete with wireless giants AT&T (T 32.70, -0.34) and Verizon (VZ 49.35, -2.22). Sprint and T-Mobile US shares dropped 13.7% and 6.2%, respectively, while Verizon shares lost 4.3% and shares of AT&T slid 1.0%.

As for the other sectors, losses ranged from less than 0.1% to 1.6%. The industrials (-1.4%), materials (-1.3%), and health care (-1.6%) sectors showed relative weakness, while the consumer discretionary (-0.4%), technology (-0.5%), energy (unch), real estate (-0.4%), and utilities (-0.3%) groups showed relative strength. 

Within the consumer discretionary space, shares of McDonald's (MCD 167.44, +9.14) rallied 5.8%, hitting a three-month high, after the fast food giant reported better-than-expected earnings and revenues for the first quarter. Meanwhile, in the tech sector, Apple (AAPL 165.26, +2.94) shares jumped 1.8%, rebounding from a nearly three-month low.

The energy group finished just a tick beneath its flat line, helped by an increase in the price of crude oil; West Texas Intermediate crude futures jumped 0.7% to $68.53 per barrel, challenging the more than three-year high they hit last week. Tensions in the oil-rich Middle East heightened on Monday -- helping to underpin the price of crude oil for fear that an actual conflict would slow production -- after Israeli Prime Minister Benjamin Netanyahu accused Iran of lying about not having a nuclear weapons development program.

Elsewhere, the consumer staples sector finished slightly ahead of the broader market, losing 0.6%, as shares of its largest component by market cap -- Walmart (WMT 88.46, +1.17) -- rallied 1.3% after the company announced that it will be selling its UK subsidiary Asda Group to Sainsbury's; however, Walmart will retain a 42% stake in the merged business.

U.S. Treasuries moved mostly higher on Monday, flattening the yield curve along the way; the yield on the benchmark 10-yr Treasury note slid two basis points to 2.94%, while the 2-yr yield finished flat at 2.48%. Meanwhile, the U.S. Dollar Index jumped 0.4% to 91.64, hitting its highest level since early January.

Reviewing Monday's economic data, which included Personal Income, Personal Spending, and PCE Prices for March, the Chicago PMI for April, and March Pending Home Sales:

• Personal income climbed 0.3% in March (Briefing.com consensus +0.4%) following a revised increase of 0.3% in February (from 0.4%). Meanwhile, personal spending rose 0.4% in March (Briefing.com consensus +0.4%) following a revised flat reading in February (from 0.2%). The PCE Price Index was flat in March (Briefing.com consensus 0.0%), and the core PCE Price Index, which excludes food and energy, increased 0.2% (Briefing.com consensus +0.2%). Year-over-year, the core PCE Price Index is up 1.9%, versus 1.6% in the last reading.
  • The key takeaway from the report is that it shows consumer inflation in the reaches of the Federal Reserve's inflation target, which will give the Federal Reserve some data-based ammunition to keep raising the fed funds rate (but not at the May FOMC meeting).
• Chicago PMI for April hit 57.6 (Briefing.com consensus 58.0), up from 57.4 in March.
• Pending Home Sales increased 0.4% in March (Briefing.com consensus +1.5%). Today's reading follows a revised 2.8% increase in February (from +3.1%).

On Tuesday, investors will receive the ISM Index for April (Briefing.com consensus 58.5), Construction Spending for March, and April auto and truck sales.

• Nasdaq Composite: +2.4% YTD
• Russell 2000: +0.4% YTD
• S&P 500: -1.0% YTD
• Dow Jones Industrial Average: -2.3% YTD

Headlines provided by Briefing.com