Day Traders Diary

9/17/18

Wall Street fell on Monday, with tech shares leading the retreat, as investors prepared for another tranche of U.S. tariffs on Chinese goods. The S&P 500 declined 0.6%, breaking a five-session winning streak, and the Dow lost 0.4%. The Nasdaq and the Russell 2000 underperformed, losing 1.4% and 1.1%, respectively.

This latest round of tariffs is expected to slap a duty of around 10% on $200 billion worth of Chinese goods. Beijing has responded by saying it may decline a U.S. offer to resume trade talks if the duties are implemented, adding it's not going to negotiate with "a gun pointed to its head." That news had equity futures down in pre-market trading.

The S&P 500 and the Dow held modest losses for much of the session, but those losses were extended in the afternoon when President Trump said an announcement on U.S.-China trade will be coming after the closing bell. The tech-heavy Nasdaq also hit news lows on the president's comment, but was notably weak even before as FAANG names lagged -- Amazon (AMZN 1908.03, -62.16) lost 3.2%; Apple (AAPL 217.88, -5.96) lost 2.7%; Netflix (NFLX 350.35, -14.21) declined by 3.9%; and Facebook (FB 160.58, -1.74) and Alphabet (GOOG 1156.05, -16.48) lost 1.1% and 1.4%, respectively.

The consumer discretionary sector, which houses Amazon, and the top-weighted technology sector, which houses the other FAANG names, finished at the bottom of the sector standings, losing roughly 1.3% apiece. Financials (-0.4%) and health care (-0.3%) also finished in the red, but the seven remaining groups finished in the green. Gains were limited though, with no group adding more than 0.5%.

Overseas, stock markets in Asia opened the week on a lower note, weighed down by the threat of new tariffs, with China's Shanghai composite losing 1.1% and Hong Kong's Hang Seng tumbling 1.3%. European equity markets also slid, but losses were more modest, with Germany's trade-heavy DAX shedding 0.2%.

U.S. Treasuries were under pressure early, pushing the yield on the benchmark 10-yr note as high as 3.02% -- its highest level in four months. However, buyers emerged later in the session, leaving the 10-yr yield higher by just one basis point at 3.00%. Meanwhile, the U.S. Dollar Index dropped 0.5% to 94.07.

Reviewing Monday's economic data, which was limited to the September Empire State Manufacturing Index:

• The Empire Manufacturing Survey for September declined to 19.0 (Briefing.com consensus 23.0) from the prior month's unrevised reading of 25.6.

Looking ahead, the NAHB Housing Market Index for September and Net Long-Term TIC Flows for July will be released on Tuesday.

• Nasdaq Composite +14.4% YTD
• Russell 2000 +10.9% YTD
• S&P 500 +8.1% YTD
• Dow Jones Industrial Average +5.4% YTD

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• Headlines provided by Briefing.com