Day Traders Diary

1/11/19

The S&P 500 (-0.01%) finished just a hair below its flat line on Friday. The benchmark index never traded in positive territory but did close at its session high. It also finished the week with a gain of 2.5%.

The Dow Jones Industrial Average (unch), the Nasdaq Composite (-0.2%), and the Russell 2000 (+0.1%) closed mixed, finishing with weekly gains of 2.4%, 3.5%, and 4.8%, respectively.

The S&P 500 sectors also finished mixed with energy (-0.6%), utilities (-0.4%), and materials (-0.4%) weighing on the broader market. Conversely, the consumer staples (+0.3%) and health care (+0.3%) sectors finished atop the standings.

The benchmark index came into the session up 10.4% from its Christmas Eve low, suggesting to many that the broader market had gotten overbought on a short-term basis and was due for a pullback. The S&P 500 was down 0.7% in the early going with weakness presumably being a function of profit-taking as opposed to any news-driven catalyst.

In addition, given the number of earnings warnings already announced this week, and with earnings season set to kick off next week, some took this as another reason to take some profits. Nevertheless, some buying interest throughout the session slowly recouped the broader market's losses. 

General Motors (GM 37.18, +2.45) for its part jumped 7.1% after it increased its adjusted fiscal 2018 and 2019 earnings above consensus. Its strength, however, was not enough to lift the consumer discretionary space (unch).

The lack of a distinctly positive reaction in the market to GM's upbeat earnings news, in light of the market overcoming prior earnings warnings this week, was reflective of a tired market preferring to take a breather. 

U.S. Treasuries closed out the week on a higher note, pushing the 2-yr yield down two basis points to 2.55% and the 10-yr yield down three basis points to 2.70% in the wake of a market-friendly consumer inflation report. The U.S. Dollar Index gained 0.1% to 95.67. WTI crude, meanwhile, snapped its nine-day winning streak, losing 1.9% to $51.68/bbl.

Reviewing the Consumer Price Index for December, which was the only economic report released on Friday:

• The Consumer Price Index (CPI) for December was right in-line with the Briefing.com consensus estimates that called for a 0.1% month-over-month decline in total CPI and a 0.2% increase in core CPI, which excludes food and energy.
  • The key takeaway from the report is that it supports the Fed's born-again belief that it can be patient with its policy approach given that the core inflation trend is stable around the longer-run target at a time when data here and abroad is revealing some softening in economic activity.

Investors will not receive any notable economic data on Monday.

• Russell 2000 +7.3% YTD
• Nasdaq Composite +5.1% YTD
• S&P 500 +3.6% YTD
• Dow Jones Industrial Average +2.9% YTD

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  • Headlines provided by Briefing.com