Day Traders Diary


  • The S&P 500 declined as much as 1.5% on Monday, as warnings from Caterpillar (CAT 124.37, -12.49, -9.1%) and NVIDIA (NVDA 138.01, -22.14, -13.8%) catalyzed early selling efforts.  The benchmark index, however, ended the day down 0.8% and finished near its best levels of the session.

    The Dow Jones Industrial Average lost 0.8%, the Nasdaq Composite lost 1.1%, and the Russell 2000 lost 0.6%.

    The S&P 500 information technology (-1.4%), communication services (-1.2%), and health care (-1.1%) sectors underperformed the broader market. Conversely, the real estate (+1.0%) and consumer staples (+0.5%) sectors were the lone groups to finish in the green.

    Stocks opened sharply lower, as disappointments from Dow component Caterpillar and chipmaker NVIDIA provided an excuse for profit-taking. The S&P 500 was up 13.3% from its Dec. 24 low heading into the session.

    Specifically, Caterpillar came up well short of Q4 earnings estimates and issued fiscal 2019 earnings guidance below expectations. NVIDIA lowered its fiscal Q4 revenue guidance below consensus, citing weaker-than-expected sales in segments like gaming and datacenter.

    Caterpillar was a huge drag on the industrial sector (-1.0%) while NVIDIA's warning cooled down the red-hot Philadelphia Semiconductor Index (-2.1%).

    While buyers were largely absent during the morning trade, they returned in the afternoon session and helped the major indices pare their losses in what has become a familiar buy-the-dip trade.

    Airline stocks outperformed, bolstered in part by lower oil prices ($51.98/bbl, -$1.64, -3.1%). American Airlines (AAL 36.57, +1.59) led the S&P 500 in gains, rising 4.6%.

    Strikingly, U.S. Treasuries did not stray too far from their unchanged marks throughout the day despite the slide in equities. The lack of a flight-to-safety bid was indicative of a stock market succumbing to profit taking rather than panic selling. The 2-yr yield decreased two basis points to 2.58%, and the 10-yr yield decreased one basis point to 2.74%. The U.S. Dollar Index lost 0.1% to 95.75.

    Investors did not receive any economic data on Monday.  This week, however, is shaping up to be a busy week of big happenings that will include a swarm of earnings reports, U.S-China trade talks, another vote on the Brexit plan in the UK Parliament, an FOMC meeting and press conference, and the January employment report.

    Looking ahead, investors will receive the Conference Board's Consumer Confidence Index for January and the S&P Case-Shiller Home Price Index for November on Tuesday.

  • Russell 2000 +9.3% YTD
  • Nasdaq Composite +6.8% YTD
  • S&P 500 +5.5% YTD
  • Dow Jones Industrial Average +5.2% YTD
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