Day Traders Diary


The S&P 500 lost 0.1% on Thursday in a tight-ranged trading session. The session featured several economic releases and a good bit of company-specific news, but the market seemed content to take a breather after the strong gains it registered to begin the week.

The Nasdaq Composite lost 0.2%, and the Russell 2000 lost 0.4%. The Dow Jones Industrial Average finished flat.

The S&P 500 materials (-0.8%) and communication services (-0.4%) sectors underperformed the broader market. Conversely, the heavily-weighted financials (+0.4%) and information technology (+0.2%) sectors outperformed.

Investors received some updates that reinforced concerns about a global economic slowdown. U.S. new home sales for January and China's industrial production report both came in softer than expected. In addition, Germany's Ifo Institute lowered its 2019 growth forecast for the German economy to 0.6% from 1.1%.

Adding to the negative macro sentiment was a Bloomberg report stating that a summit between President Trump and President Xi is apt to be pushed back to late April, if it happens at all.

The stock market held its ground, though, teetering between small gains and losses for most of the session. A batch of corporate news seemed to garner more attention.

Widely-held shares of Facebook (FB 170.17, -3.20, -1.9%), Boeing (BA 373.30, -3.84, -1.0%), and Johnson & Johnson (JNJ 138.02, -1.39, -1.0%) weighed on the broader market following negative press pertaining to familiar issues with the companies.

A New York Times report indicated that Facebook is under criminal investigation for some of its data deals that it arranged with tech companies. In Boeing's case, it continued to be weighed down by concerns surrounding the forced grounding of its 737 MAX 8 and 9 planes. Johnson & Johnson for its part was ordered to pay $29 million to a woman with cancer who used the company's baby powder.

On the other hand, more positive analyst coverage on Apple (AAPL 183.73, +2.02, +1.1%) underpinned the stock's outperformance, which extended its weekly gain to 6.3%. Cowen initiated coverage of Apple with an Outperform rating. 

General Electric (GE 10.30, +0.28) jumped 2.8% despite the company issuing a 2019 earnings warning. The stock had been down more than 2.0% prior to the open, but shares rallied after CEO Larry Culp reassured investors with an encouraging 2020 and 2021 outlook. 

Separately, the UK Parliament rejected a second Brexit referendum but voted in favor of extending the Brexit deadline until June 30 at the latest. The delay still needs to be approved by all 27 member states of the European Union.

U.S. Treasuries finished on a lower note, pushing yields higher across the curve. The 2-yr yield increased one basis point to 2.45%, and the 10-yr yield increased two basis points to 2.63%. The U.S. Dollar Index rose 0.2% to 96.78. WTI crude rose 0.5% to $58.58/bbl. 

Reviewing Thursday's economic data, which included New Home Sales for January, the weekly Initial and Continuing Claims report, and Import and Export Prices for February:

  • New home sales decreased 6.9% month-over-month in January to a seasonally adjusted annual rate of 607,000 ( consensus 623,000) from an upwardly revised 652,000 (from 621,000) in December. On a year-over-year basis, new home sales were down 4.1%.
    • The key takeaway from the report is that new home sales activity continues to be soft despite moderating price pressures.
  • Initial claims for the week ending March 9 increased by 6,000 to 229,000 ( consensus 225,000) while continuing claims for the week ending March 2 increased by 18,000 to 1.776 million.
    • The key takeaway from the report is that there were no wide swings to disrupt the view that employers are generally reluctant to cut staff due to tight labor market conditions.
  • Import prices and export prices were both up 0.6% month-over-month in February. Excluding fuel, import prices were flat. Excluding agriculture, export prices were up 0.7%.
    • The key takeaway from the report is that the year-over-year readings reveal no inflation pressure. Nonfuel import prices were down 0.6%, versus a 2.0% increase for the 12 months ending February 2018, while non-agricultural export prices were up just 0.3%, versus a 3.4% increase for the 12 months ending February 2018.

Looking ahead, investors will receive the following economic reports on Friday: the Empire State Manufacturing Survey for March, Industrial Production and Capacity Utilization for February, the preliminary University of Michigan Index of Consumer Sentiment for March, the JOLTS - Job Openings report for January, and Net Long-Term TIC Flows for January.

  • Russell 2000 +14.9% YTD
  • Nasdaq Composite +15.0% YTD
  • S&P 500 +12.0% YTD
  • Dow Jones Industrial Average +10.2% YTD

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