Day Traders Diary



Stocks have rebounded today following reports that China and the U.S. will resume trade talks as early as next week, the first official talks since negotiations broke down two months ago. The major averages have largely been climbing since the opening bell, but some recent selling has taken them away from session highs. The S&P 500 up 0.9%.

The blue-chip Dow is outperforming the S&P 500, sporting a gain of 1.6%, following a blow-out earnings report from Walmart (WMT 99.56, +9.34), which has spiked 10.5%. Cisco Systems (CSCO 45.29, +1.43) is also higher after reporting its quarterly results, up 3.3%, and trade-sensitive Boeing (BA 344.75, +12.99) is up 3.9% on the U.S.-China trade talk headlines.

All 11 S&P sectors are in the green, and four are sporting gains of more than 1.0%, including financials (+1.4%), industrials (+1.1%), consumer staples (+1.6%), and telecom services (+1.7%). The lightly-weighted utilities space is the worst-performing group, but it still holds a sizable gain of 0.7%.

On the downside, struggling retailer J.C. Penney (JCP 1.82, -0.59) has fallen to another record low today, plunging 24.9%, after its Q2 earnings report showed lower-than-expected earnings and revenues. The company also issued disappointing guidance for the fiscal year.

Looking at other markets, U.S. Treasuries are selling off today, pushing yields higher across the curve, with the benchmark 10-yr yield up two basis points at 2.87%. Meanwhile, WTI crude futures are up 0.3% at $65.23/bbl, and the CBOE Volatility Index is down 10.7% at 13.07 after touching a six-week high on Wednesday.

In Washington, Treasury Secretary Steven Mnuchin recently said the U.S. is preparing additional sanctions against Turkey, where American pastor Andrew Brunson is being detained for allegedly supporting a coup attempt in 2016. The Turkish lira was up as much as 4.8% against the dollar, but is now down 0.2%.

Reviewing today's economic data, which included July Housing Starts and Building Permits, weekly Initial Claims, and the Philadelphia Fed Index for August:

  • Housing starts rose to a seasonally adjusted annualized rate of 1.168 million units in July ( consensus 1.256 million), up from a revised 1.158 million units in June (from 1.173 million). Building permits rose to a seasonally adjusted 1.311 million in July ( consensus 1.316 million) from a revised 1.292 million in June (from 1.273 million).
    • The key takeaway from the report is the recognition that single-family starts rose just 0.9% to 862,000, which is a modest pace that likely reflects the headwinds builders are facing with higher costs for materials, labor, and land.
  • The latest weekly initial jobless claims count totaled 212,000, while the consensus expected a reading of 217,000. Today's tally was below the revised prior week count of 214,000 (from 213,000). As for continuing claims, they declined to 1.721 million from a revised count of 1.760 million (from 1.755 million).
    • The key takeaway from the report is that low initial claims activity is consistent with a tight labor market.
  • The Philadelphia Fed Survey for August slid to 11.9 ( consensus 23.0) from an unrevised 25.7 in July.
    • The key takeaway from the report is that there was an uptick in the diffusion index for future general activity following four straight declines, as more than half 50% of firms expect increases in activity over the next six months.
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