Day Traders Diary


The major averages registered strong gains as the April jobs report boosted stocks at the open. The S&P 500 jumped 1.0% and notched a fresh record close at 1,614.40 while the Dow added 0.9% after peeking above 15,000 in morning action.

On the surface, the employment report for April looked good. Payroll growth surprised to the upside, increasing by 165,000. That was 10,000 more than the 155,000 expected by the consensus. Revisions in March, to 138,000 from 88,000, and February, to 332,000 from 268,000, were strongly positive.

Yet, the underlying details point toward weaker consumption levels as the average workweek dropped to 34.4 hours in April from 34.6 and average hourly earnings increased 0.2%.

The decline in workweek more than offset the increase in payrolls and earnings. Altogether, aggregate wages declined 0.3% in April. That would be the first decline in wages since January.

Cyclical sectors led stocks higher and two recent underperformers, industrials and materials, finished atop the leaderboard.

The industrial space displayed all-around strength, but transportation-related stocks outperformed notably. The Dow Jones Transportation Average ended higher by 2.1% as 18 of 20 components registered gains. Although the index traded ahead of the broader market, it remains 1.0% away from its all-time best.
Elsewhere, the materials sector benefitted from a notable rise in basic metals. Copper made its biggest advance in more than a year by surging 6.5% to $3.306. Steelmakers also contributed to the outperformance of the growth-sensitive sector as the Market Vectors Steel ETF (SLX 42.59, +1.19) gained 2.9%. Meanwhile, the SPDR Materials Select Sector ETF (XLB 39.82, +0.69) ended higher by 1.8%.
The energy space also outperformed as crude oil extended its recent strength and rose 1.6% to $95.47. Since April 17, the energy component has added almost $10.
While most cyclical groups registered gains in excess of 1.0%, the financial sector underperformed. JPMorgan Chase (JPM 47.57, -0.51) slipped 1.1% after the New York Times gained access to confidential government documents alleging the bank engaged in 'manipulative schemes' in the energy market and that its executives gave 'misleading statements' while testifying under oath.
In notable sector earnings, American International Group (AIG 44.52, +2.39) added 5.7% after reporting a bottom-line beat.
Although the April jobs report received most of today's attention, some noteworthy quarterly reports crossed the wires as well. LinkedIn (LNKD 175.59, -26.08) slumped 12.9% after its better-than-expected earnings report included cautious full-year revenue guidance.
On the downside, the defensively-geared telecom and utilities sectors ended with respective losses of 0.2% and 0.4%.
Reviewing today's remaining data, the ISM Non-manufacturing Index declined from 54.4 in March to 53.1 in April. The consensus expected the index to fall to 54.0.
Total factory orders fell 4.0% in March after increasing a downwardly revised 1.9% (from 3.0%) in February. The consensus expected factory orders to fall 2.5%.
Durable goods orders fell 5.8% (from a previously released -5.7%) after increasing 4.3% in March.
There is no notable economic news set to be released on Monday. On Tuesday, March consumer credit will be announced at 15:00 ET. All comments contained herein are for informational purposes only, and should not be considered as a solicitation to buy or sell any security. The firm does not guarantee the accuracy or completeness of the information or make any warranties regarding results from it's usage.