Day Traders Diary

9/6/18

Stocks have fallen once again today, putting the S&P 500 on track for its fourth loss in five sessions. The benchmark index is currently drifting just a step above its session low with a loss of 0.6%, extending its weekly decline to 1.0%. Meanwhile, the tech-heavy Nasdaq is underperforming, down 1.2%, but the Dow is down just 0.1%.

The major averages began today's session on a flat note, but were eventually pulled lower by the top-weighted information technology sector. The tech space is currently down 1.2%, with giants like Facebook (FB 161.81, -5.33), Apple (AAPL 222.85, -4.02), and Alphabet (GG 1160.27, -26.20) showing losses between 1.8% and 3.2%.

Chipmakers have also weighed on the sector, evidenced by a 2.4% drop in the Philadelphia Semiconductor Index. Micron (MU 45.43, -4.10) is particularly weak, down 8.3%, after announcing that NAND pricing declined in the third quarter, triggering concerns about end demand/excess supply that go hand-in-hand with remarks about pricing declines.

Meanwhile, the energy sector is the worst-performing group with a loss of 1.6%, weighed down by a drop in the price of crude oil. WTI crude futures are down 2.2% at $67.23/bbl, with just about all of the decline coming after the release of the EIA's weekly crude inventory report, which showed a draw of 4.3 million barrels. Gasoline inventories rose though, adding 1.8 million barrels.

In total, seven of eleven sectors are in the red. The four advancers are industrials (+0.3%), utilities (+0.3%), telecoms (+0.2%), and real estate (+0.4%).

Looking at other markets, U.S. Treasuries have climbed today, pushing yields lower across the curve, with the benchmark 10-yr yield sliding two basis points to 2.90%. Meanwhile, the U.S. Dollar Index is roughly flat at 95.04, and the CBOE Volatility Index has jumped 6.0% to 14.74, hitting its highest level in over three weeks.

In Washington, U.S. and Canadian officials have continued trade talks today, and the White House may impose tariffs on $200 billion worth of Chinese goods as soon as a public comment period ends at midnight tonight. Beijing has vowed to retaliate if the tariffs are implemented.

Reviewing today's big batch of economic data, which included the August ADP Employment Change report, the revised readings for Q2 Productivity and Unit Labor Costs, the weekly Initial Claims report, July Factory Orders, and the August ISM Services Index:

• The ADP National Employment Report showed an increase of 163,000 in August (Briefing.com consensus 186,000), and the July reading was revised to 217,000 (from 219,000).
  • The ADP reading is seen as a prelude to the BLS's nonfarm payrolls figure (Briefing.com consensus 187,000), which will be released on Friday.
• Second quarter unit labor costs were revised to -1.0% (Briefing.com consensus -0.9%) from -0.9% in the preliminary reading, and Q2 productivity was left unrevised at +2.9%, as expected.
  • The key takeaway from the revised report is the same as the advance estimate: labor costs look to be in check, which will facilitate a gradual tightening path for the Federal Reserve.
• The latest weekly initial jobless claims count totaled 203,000, while the Briefing.com consensus expected a reading of 214,000. Today's tally was below the unrevised prior week count of 213,000. As for continuing claims, they declined to 1.707 million from a revised count of 1.710 million (from 1.708 million).
  • The key takeaway from the report is that it is consistent with a tight labor market, as employers appear reluctant to cut payrolls.
• The Factory Orders report for July showed a decrease of 0.8% (Briefing.com consensus -0.6%), and the June reading was revised to +0.6% from +0.7%.
  • The key takeaway from the report is that a decline in shipments of nondefense capital goods excluding aircraft will weigh on Q3 GDP estimates, but today's reading was consistent with the Advance Durable Orders report for July, meaning the decline should have been expected.
• The ISM Services Index for August ticked up to 58.5 (Briefing.com consensus 56.5) from an unrevised reading of 55.7 in July.
  • The key takeaway from the report is that a solid rebound from a July pullback indicates continued health in the non-manufacturing sector.

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  • Headlines provided by Briefing.com