Day Traders Diary

5/8/18

The stock market ended Tuesday little changed as investors chewed on President Trump's decision to pull the U.S. out of the Iran nuclear agreement all the way through the closing bell. The Dow and the Nasdaq finished a tick higher, while the S&P 500 finished a tick lower. Small caps rallied though, pushing the Russell 2000 higher by 0.5%.

Stocks held steady ahead of the president's afternoon announcement, as investors weren't entirely sure as to what he would decide to do, but volatility picked up in the aftermath. Mr. Trump has frequently criticized the Iran nuclear deal, which lifted economic sanctions against Iran in exchange for limits on the country's nuclear program, and ultimately decided to reimpose the "highest level of economic sanctions" against Iran, effective immediately, because he felt the country was not honoring the agreement.

European allies -- including France, Germany, and the U.K. -- had encouraged Mr. Trump to stay in the agreement, which they signed alongside the U.S., Russia, and China back in 2015, and expressed regret following the president's decision, adding that they remain committed to the deal.

Crude oil futures and energy names were the focus on Wall Street, as U.S. sanctions on Iran -- which is OPEC's third-largest oil producer -- will undoubtedly reduce supply on the global crude oil market. WTI crude futures had a counter-intuitive reaction -- likely the result of a "buy the rumor, sell the news" trade -- and retreated from a more than three-year high, dropping 2.3% to $69.08 per barrel. The S&P's energy sector, meanwhile, was up and down following the decision, but eventually settled atop of the sector standings with a gain of 0.8%.

The financials and industrials sectors finished right behind energy, adding 0.7%, and information technology was the only other group to settle in the green, ticking up 0.3%. Within the financial space, Citigroup (C 71.00, +2.50) was the top-performer, rallying 3.7%, following news that activist investor ValueAct has built a $1.2 billion stake in the company. A rise in Treasury yields also helped the heavily-weighted financial space; the yield on the benchmark 10-yr Treasury note rose two basis points to 2.97%.

On the downside, seven groups finished in the red, with utilities (-2.5%) and telecom services (-1.3%) closing at the bottom of the sector standings; however, no other group lost more than 0.8%. The consumer discretionary space declined 0.5%, with Comcast (CMCSA 30.59, -1.80) showing particular weakness, losing 5.6%, following reports that it's planning a cash bid for the entertainment assets of 21st Century Fox (FOXA 37.99, -0.05) in an attempt to upend Disney's (DIS 101.79, -0.69) pursuit of those assets.

As for economic data, investors received just one report on Tuesday -- the March Job Openings and Labor Turnover Survey -- which showed that job openings increased to 6.550 million from a revised 6.078 million (from 6.052 million) in February. Wednesday's session will feature the release of the Producer Price Index for April (Briefing.com consensus +0.2%), Wholesale Inventories for March (Briefing.com consensus +0.5%), and the weekly MBA Mortgage Applications Index.

Headlines provided by Briefing.com