Day Traders Diary

8/14/18

The S&P 500 rebounded on Tuesday, ending its four-session losing streak with a gain of 0.6%. The Nasdaq and the Dow also advanced, adding 0.7% and 0.5%, respectively. The major averages quickly extended modest opening gains, but then trended sideways for the final five hours of trading, ending near their session highs.

Tuesday's rebound on Wall Street coincided with a rebound in the Turkish lira, which had plunged nearly 25% against the U.S. dollar in the prior two sessions. The lira added about 8% against the greenback on Tuesday, helping to ease concerns over the financial health of lenders with heavy exposure to Turkey.

However, the dollar finished higher overall, evidenced by a 0.4% increase in the U.S. Dollar Index, which finished at a more than one-year high (96.56). That strength weighed on the dollar-denominated WTI crude futures, which were up as much as 1.7%, but finished lower by 0.3% at $67.05/bbl.

All 11 S&P sectors advanced on Tuesday, with financials (+0.9%) and consumer discretionary (+1.0%) leading the charge. The top-weighted information technology sector (+0.6%) got off to a slow start, slipping into negative territory shortly after the opening bell, but eventually strengthened to finish in line with the broader market. Utilities was the worst-performing sector, but still added 0.2%.

Home Depot (HD 193.10, -1.04) and Advance Auto (AAP 156.13, +11.29) kicked off a retail-heavy earnings week by reporting better-than-expected results on Tuesday morning, but the reaction was mixed; Home Depot lost 0.5%, while Advance Auto spiked 7.8%. Retailers finished higher overall though, evidenced by a 2.3% increase in the SPDR S&P Retail ETF (XRT 51.86, +1.15).

Meanwhile, in the bond market, U.S. Treasuries sold off on Tuesday, pushing yields higher across the curve. The yield on the benchmark 10-yr Treasury note advanced two basis points to 2.90%, while the yield on the Fed-sensitive 2-yr Treasury note climbed three basis points to 2.63%.

Reviewing Tuesday's economic data, which included July Import/Export Prices and the NFIB Small Business Optimism Index for July:

• Import prices were flat in July after declining a revised 0.1% in June (from -0.4%). Excluding oil, import prices slid 0.3% in July after slipping an unrevised 0.3% in June. Export prices decreased 0.5% in July after rising a revised 0.2% in June (from +0.3%). Excluding agriculture, export prices were flat in July after rising an unrevised 0.4% in June.
  • The key takeaway from the report is that it seemingly reflects some of the effects of a stronger dollar as nonfuel import prices declined month-over-month in both June and July.
• The NFIB Small Business Optimism Index for July came in at 107.9, which is above the unrevised June reading of 107.2.

Looking ahead, investors will receive a big batch of data on Wednesday that includes the weekly MBA Mortgage Applications Index, July Retail Sales, the preliminary reading for Q2 Productivity and Unit Labor Costs, the Empire Manufacturing Index for August, Industrial Production and Capacity Utilization for July, Business Inventories for June, and the NAHB Housing Market Index for August.

• Nasdaq Composite +14.0% YTD
• Russell 2000 +10.2% YTD
• S&P 500 +6.2% YTD
• Dow Jones Industrial Average +2.4% YTD

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  • Headlines provided by Briefing.com