Day Traders Diary

9/19/18

The S&P 500 finished Wednesday with a slim gain of 0.1%, buoyed by financial shares, which rallied amid another rise in interest rates. The blue-chip Dow Jones Industrial Average outperformed, adding 0.6%, but the tech-heavy Nasdaq lagged, closing lower by 0.1%. The small-cap Russell 2000 fell 0.5%.

Wednesday's mixed outing followed an unexpected rebound on Tuesday, which came after the U.S. announced a $200 billion tranche of tariffs on Chinese goods, to which Beijing responded with $60 billion in retaliatory duties. Asian shares rallied for the second day in a row on Wednesday, with China's Shanghai Composite climbing 1.1%.

The rate-sensitive financial sector led the S&P 500 higher with a gain of 1.8% as Treasuries sold off, sending yields higher across the curve. The yield on the benchmark 10-yr note, for instance, climbed three basis points to 3.08%, hitting a fresh a four-month high. For the week, the 10-yr yield is up eight basis points.

The materials sector (+1.1%) also outperformed on Wednesday, but most groups finished in the red, including the top-weighted technology space (-0.1%). The lightly-weighted utilities, telecom services, and real estate sectors were the worst performers, losing between 0.9% and 2.1% apiece.

Cannabis stocks were in focus with Tilray (TLRY 214.06, +59.08) going on a wild ride after its CEO said on Tuesday evening that his business would be a "smart hedge" for major pharmaceutical companies. TLRY shares finished higher by 38.1%, but were halted several times after adding as much as 93.2% and losing as much as 1.3%.

Amazon (AMZN 1926.42, -14.63) also made headlines as it's reportedly planning to construct up to 3,000 cashier-less stores by 2021 and is testing a new shopping site for furniture and women's shoes -- news that weighed on shares of Wayfair (W 139.03, -4.23, -3.0%). Amazon shares finished lower by 0.8%.

In geopolitics, North Korean leader Kim Jong Un agreed to further steps towards denuclearization after meeting in Pyongyang with South Korean president Moon Jae-in, and China said it won't devalue the yuan to make its exports more competitive, despite its ongoing trade dispute with the U.S.

Trade talks between the United States and Canada resumed in Washington on Wednesday, but Bloomberg reported that a deal this week is unlikely.

Reviewing Wednesday's economic data, which included August Housing Starts and Building Permits, the Q2 Current Account Balance, and the weekly MBA Mortgage Applications Index:

• Housing starts rose to a seasonally adjusted annualized rate of 1.282 million units in August (Briefing.com consensus 1.229 million), up from a revised 1.174 million units in July (from 1.168 million). Building permits declined to a seasonally adjusted 1.229 million in August (Briefing.com consensus 1.310 million) from a revised 1.303 million in July (from 1.311 million).
  • The key takeaway from the report is that permits (a leading indicator) for single-family homes fell 6.1% month-over-month to 820,000, driven by declines across all four geographic regions.
• The current account deficit for the second quarter totaled $101.5 billion (Briefing.com consensus -$103.3 billion). The first quarter deficit was revised to $121.7 billion from $124.1 billion.
• The weekly MBA Mortgage Applications Index rose 1.6% to follow last week's decrease of 1.8%.

Looking ahead, investors will receive several pieces of economic data on Thursday, including weekly Initial Claims, the Philadelphia Fed Index for September, Existing Home Sales for August, and the Conference Board's Leading Economic Index for August.

• Nasdaq Composite +15.2% YTD
• Russell 2000 +10.9% YTD
• S&P 500 +8.8% YTD
• Dow Jones Industrial Average +6.8% YTD

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  • Headlines provided by Briefing.com