Day Traders Diary

1/2/18

Wall Street finished slightly higher on Wednesday despite global economic growth concerns and volatility extending their reach into 2019. The S&P 500 managed to squeeze out a gain of 0.1% after being down as much as 1.6% in the opening minutes.

The Dow Jones Industrial Average (+0.1%), the Nasdaq Composite (+0.5%), and the Russell 2000 (+0.5%) traded in similar fashion to finish with modest gains.

Stocks opened sharply lower after weak economic data from China reminded investors that a slowing Chinese economy could adversely impact global growth and corporate earnings growth. The latest data showed a contraction in China's manufacturing sector for the first time since May 2017. The data was in-line with the official Manufacturing PMI reading, which was released earlier this week.

Bad news led to another broad-based effort to reduce risk, but it didn't seem bad enough to justify the steep losses. The S&P 500 would quickly recover and teeter between gains and losses for most of the day.

Within the S&P 500, the energy (+2.1%), communication services (+1.3%), consumer discretionary (+0.9%), and financial (+0.7%) sectors helped lead advance, though the defensive-oriented real estate (-2.3%), utilities (-1.8%), health care (-1.4%), and consumer staples (-0.4%) sectors dragged on the broader market.

Energy stocks abruptly reversed course after oil prices swung into positive territory. WTI crude increased 2.0% to $46.38/bbl after reports that Saudi Arabia decreased its crude exports in December by roughly 500,000 barrels per day.

Retail was another group that outperformed and helped lift the consumer discretionary sector. The SPDR S&P Retail ETF (XRT 41.57, +0.58) rose 1.4%.

Longer-dated U.S. Treasuries extended gains, pressuring yields. The 2-yr yield declined one basis points to 2.49%, and the 10-yr yield declined three basis points to 2.66%. The U.S. Dollar Index rose 0.7% to 96.82.

Investors did not receive any notable economic data on Wednesday. 

Looking ahead, investors will receive several economic reports on Thursday: the ISM Manufacturing Index for December; the ADP Employment Change report for December; the weekly MBA Mortgage Applications Index; the weekly Initial and Continuing Claims report; and auto and truck sales.

• Nasdaq Composite +0.5% YTD
• Russell 2000 +0.5% YTD
• Dow Jones Industrial Average +0.1% YTD
• S&P 500 +0.1% YTD

• • • Headlines provided by Briefing.com