Day Traders Diary

1/30/19

The S&P 500 is up 0.9%, as positive reactions to earnings results from Dow components Apple (AAPL 162.76, +8.08, +5.2%) and Boeing (BA 390.09, +25.03, +6.9%) have fueled a broad-based rally effort. In addition, there is some underlying optimism that the U.S-China trade talks, which began today in Washington, and the upcoming FOMC decision at 2:00 p.m. ET and press conference from Fed Chair Powell at 2:30 p.m. ET today, will carry some positive outcomes for the market. 

The Dow Jones Industrial Average is up 1.3%, the Nasdaq Composite is up 1.3%, and the Russell 2000 is up 0.6%.

All 11 S&P 500 500 are higher with information technology (+2.0%) and consumer discretionary (+1.4%) leading today's advance.

The heavily-weighted financial sector (+0.2%) is underperforming the broader market, yet it has rebounded from an earlier 0.5% decline that was driven by weakness in asset management stocks that followed disappointing fourth quarter results from T. Rowe Price (TROW 87.63, -5.12, -5.5%), Franklin Resources (BEN 29.23, -1.96, -6.3%), and Invesco (IVZ 18.64, -0.42, -2.2%).

Apple's results and guidance were construed as better than feared, given how poor sentiment had gotten ahead of the report. Specifically, Apple reported in-line Q1 results and guided Q2 revenue that was towards the low end of expectations.  Semiconductor company Advanced Micro Devices (AMD 22.28, +3.03, +15.7%) fell into the same better-than-feared category and is up strongly after its report, contributing to the strength in the Philadelphia Semiconductor Index (+1.7%) and the information technology sector.

Boeing for its part impressed investors by exceeding Q4 revenue and earnings estimates by a wide margin and issuing upbeat FY19 guidance.  In addition, Boeing provided a healthy forecast for commercial airplane deliveries between 895 and 905, up nearly 12% from 2018 at the midpoint.

Fellow Dow component McDonald's (MCD 182.39, +0.23, +0.2%) beat earnings estimates, but said it anticipates labor costs and foreign currency translation will put some pressure on earnings in 2019.

AT&T (T 29.28, -1.41, -4.6%), Amgen (AMGN 181.94, -10.17, -5.3%), and General Dynamics (GD 170.18, -5.82, -3.3%) also beat earnings estimates, but investors have not been as forgiving toward their results and/or guidance as they have been towards other stocks.

Despite an otherwise mixed batch of earnings news since yesterday's close, market participants have presumably been comforted by the idea that the FOMC, and Fed Chair Powell, will reinforce a patient policy approach today, and that the administration will want to put forth its best communication foot today and tomorrow regarding trade negotiations so as not to undermine the improved sentiment in the stock market.

Reviewing today's economic data, which included the ADP National Employment Report for January, Pending Home Sales for December, and the weekly MBA Mortgage Applications Index:

• The ADP National Employment Report showed an increase of 213,000 in January (Briefing.com consensus 170,000), and the December reading was revised to 263,000 (from 271,000).
• Pending Home Sales decreased 2.2% in December (Briefing.com consensus +0.7%). Today's reading follows a revised decrease of 0.9% in November (from -0.7%).
• The weekly MBA Mortgage Applications Index decreased 3.0% following a 2.7% decline in the prior week.
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  • Headlines provided by Briefing.com