Day Traders Diary

2/4/18

The S&P 500 gained 0.7% on Monday with shares of mega-cap companies leading the advance. The Dow Jones Industrial Average gained 0.7%, the Nasdaq Composite gained 1.2%, and the Russell 2000 gained 1.0%.

A mega-cap rally characterized the day's trading action for most of the session with buying interest concentrated among a handful of names ahead of Alphabet's (GOOG 1132.80, +22.05, +2.0%) earnings report after the close. A last minute swarm of broad-based buyers, though, pushed most sectors to finish near their best levels of the day.

The S&P 500 information technology (+1.6%), industrials (+1.3%), and communication services (+1.0%) sectors outperformed the broader market.

Shares of widely-held companies like Apple (AAPL 171.25, +4.73, +2.8%), Microsoft (MSFT 105.74, +2.96, +2.9%), Facebook (FB 169.25, +3.54, +2.1%), and Netflix (NFLX 351.34, +11.49, +3.4%) all rose more than 2.0%.

Defense stocks increased, too, underpinning the strength in the industrials sector. The iShares Dow Jones US Aerospace & Defense ETF (ITA 198.86, +4.06) gained 2.1%.

Some story stocks from Monday included Clorox (CLX 158.38, +8.52, +5.7%) and Sysco (SYY 66.64, +3.07, +4.8%), both of which beat earnings estimates. Also, Ultimate Software (ULTI 332.54, +54.71) surged 19.7% after the company received a cash buyout offer led by private equity firm Hellman & Friedman for $11 billion, or $331.50/share.

The health care (-0.3%) and materials (-0.2%) sectors underperformed the broader market and were the only sectors ending Monday with a loss.

U.S. Treasuries also finished the day with losses, pushing yields higher across the curve. The 2-yr yield and 10-yr yield increased three basis points each to 2.53% and 2.72%, respectively. The U.S. Dollar Index gained 0.3% to 95.84. WTI crude lost 1.2% to $54.61/bbl.

Reviewing Monday's lone economic report, the Factory Orders report for November:

• Factory orders declined 0.6% in November (Briefing.com consensus +0.3%) on the heels of a 2.1% decline in October. Excluding transportation, orders were down 1.3% in November following a 0.2% increase in October.
  • The key takeaway from the report is that it showed a drop in business investment in November, evidenced by the 0.6% decline in new orders for nondefense capital goods excluding aircraft. That raises the potential for a further decline in December since the November softness preceded the big market sell-off in December and the start of the partial government shutdown in January that were drags on business confidence.

Looking ahead, investors will receive the ISM Non-Manufacturing Index for January on Tuesday.

• Russell 2000 +12.5% YTD
• Nasdaq Composite 10.7% YTD
• S&P 500 +8.7% YTD
• Dow Jones Industrial Average +8.2% YTD

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• Headlines provided by Briefing.com