Day Traders Diary

3/21/19

The S&P 500 gained 1.1% on Thursday, bolstered by the notion of a dovish Fed and persistently low U.S. Treasury yields. Leadership from the S&P 500 information technology sector (+2.5%), driven by gains in Apple (AAPL 195.09, +6.93, +3.7%) and Micron (MU 43.99, +3.86, +9.6%), also helped carry buying momentum throughout the day. The S&P 500 closed at its highest level this year.

The Dow Jones Industrial Average gained 0.8%, the Nasdaq Composite gained 1.4%, and the Russell 2000 gained 1.3%.

Ten of the 11 S&P 500 sectors finished higher, led by information technology (+2.5%), real estate (+1.8%), and consumer discretionary (+1.3%). Conversely, the financial sector lost 0.3%, pressured by concerns that the recent compression in spreads will lead to weak net interest margins for lenders. 

Apple reclaimed its title as the world's most valuable company after Needham upgraded the stock to Strong Buy from Buy and raised its price target to $225. Needham's upgrade was the latest from a host of positive analyst coverage this month that has helped lift the stock 12.7% in March, including Thursday's 3.7% gain.

Micron suggested a bottom could be close with an improvement likely coming at the back half of the year. That call helped investors overlook its disappointing fiscal Q3 guidance and helped spur buying interest within the Philadelphia Semiconductor Index (+3.5%). 

In other earnings news, Conagra Brands (CAG 25.82, +2.92, +12.8%) and Darden Restaurants (DRI 116.11, +7.46, +6.9%) were some of the biggest gainers in the S&P 500 following their earnings reports.

Shares of Biogen (BIIB 226.88, -93.71), on the other hand, plunged 29.2% after the company said it will discontinue its Phase 3 trials of aducanumab for Alzheimer's.

Separately, Levi Strauss (LEVI 22.41, +5.41, +31.8%) became the biggest IPO in 2019 Thursday, opening at $22.22 after pricing its IPO at $17.

U.S. Treasuries closed roughly unchanged after declining noticeably following Wednesday's FOMC policy decision. The 2-yr yield and the 10-yr yield remained at 2.40% and 2.54%, respectively, although the 10-yr yield kissed 2.50% at its best level in morning action. The U.S. Dollar Index rose 0.7% to 96.41, driven by the idea that the U.S. remains the best place to invest. WTI crude lost 0.4% to $59.95/bbl.

Reviewing Thursday's economic data, which included the weekly Initial and Continuing Claims report, the Philadelphia Fed Index for March, and the the Conference Board's Leading Economic Index for February:

• Initial claims for the week ending March 16 decreased by 9,000 to 221,000 (Briefing.com consensus 223,000) while continuing claims for the week ending March 9 dropped by 27,000 to 1.750 million.
  • The key takeaway from the report is that it covers the period in which the survey for the March employment situation report was conducted, so with the low level of initial claims, expectations will pick up that March nonfarm payrolls will be up by a solid amount.
• The Philadelphia Fed Index jumped to 13.7 in March (Briefing.com consensus 6.0) from -4.1 in February.
  • The key takeaway from the report is that it was accented by a pickup in new orders and a moderation in price pressures, which is the type of combination that has convinced the Fed to be patient before making any policy rate changes.
• The Conference Board's Leading Economic Index increased 0.2% in February, as expected, following an unchanged reading for January. This is the first increase in the index since September 2018, and it was supported by gains in all the financial components and consumer expectations for business conditions.
  • The key takeaway from the report is that the strengths among the leading indicators have become much less widespread, with only six of the ten components making positive contributions.

Looking ahead, investors will receive Existing Home Sales for February, Wholesale Inventories for January, and the Treasury Budget for February on Friday.

• Nasdaq Composite +18.1% YTD
• Russell 2000 +15.9% YTD
• S&P 500 +13.9% YTD
• Dow Jones Industrial Average +11.3% YTD

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  • Headlines provided by Briefing.com