Day Traders Diary

2/19/19

The S&P 500 increased 0.2% on Tuesday, as strong earnings results from Wal-Mart (WMT 102.20, +2.21, +2.2%) helped ease some concerns about consumer spending. Investors also remained optimistic about U.S.-China trade talks and a market-friendly Federal Reserve. 

The Nasdaq Composite gained 0.2%, and the Russell 2000 gained 0.3%. The Dow Jones Industrial Average, however, finished flat. 

Nine of the 11 S&P 500 sectors finished higher with materials (+0.6%), utilities (+0.5%), consumer staples (+0.5%), and consumer discretionary (+0.5%) outperforming. Conversely, the health care (-0.3%) and industrial (-0.1%) sectors were the lone groups to finish in the red.

The U.S. and China resumed trade negotiations in Washington. President Trump said he believes China is intent on working quickly toward a deal to avoid a tariff hike on March 2. President Trump reiterated a possible extension to the trade deadline, telling reporters that the March 1 deadline was "not a magical date."

There was also some Fedspeak ahead of the FOMC's Minutes from the January meeting, which will be released on Wednesday.

New York Fed President Williams (FOMC voter) said mixed economic data has been a strong argument for a pause for further rate hikes, although he added that he expects to be drawing down the balance sheet for some time. Cleveland Fed President Mester (non-FOMC voter) for her part reportedly said she favors slowing the Fed's balance sheet normalization effort, but said the fed funds rate may need to move a bit higher than current levels if the economy evolves as she expects.

The market took the good and ignored the bad, which is all it has done so far in 2019.

Wal-Mart's earnings report was definitely good news for investors. An earnings beat and healthy same-store sales growth from the Dow component helped spur gains in the consumer staples (+0.5%) and consumer discretionary (+0.5%) sectors.

Its strong earnings report helped temper concerns about a slowdown in consumer spending that were fueled by the lousy Retail Sales report for December released last week. The SPDR S&P Retail ETF (XRT 45.58, +0.24) increased 0.5%.

U.S. Treasuries saw continued buying interest, driving yields lower across the curve. The 2-yr yield and 10-yr yield decreased two basis points each to 2.50% and 2.65%, respectively. The U.S. Dollar Index declined 0.4% to 96.52 amid strength in the euro. WTI crude rose 1.6% to $56.45/bbl.

Reviewing Tuesday's lone economic report, the NAHB Housing Market Index for February:

• The NAHB Housing Market Index for February increased to 62 (Briefing.com consensus 59) from 58 in January.

Looking ahead, investors will receive the FOMC Minutes for the January meeting and the weekly MBA Mortgage Applications Index on Wednesday.

• Russell 2000 +16.8% YTD
• Nasdaq Composite +12.8% YTD
• Dow Jones Industrial Average +11.0% YTD
• S&P 500 +10.9% YTD

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  • Headlines provided by Briefing.com