Day Traders Diary


The S&P 500 registered its first decline in five sessions, losing 0.5%. Small caps faced additional selling pressure as the Russell 2000 fell 1.4%.

Stocks held modest losses into the afternoon, but slid to fresh lows after the Federal Reserve released its latest policy directive, which was little changed from prior statements. Most notably, the directive acknowledged the recent slowdown in the housing sector and noted that fiscal policy is presenting a headwind to growth. In addition, the Committee dropped the reference to "tightening financial conditions" that appeared in the September statement.

While the statement did not throw the market any taper-related curveballs, it may have been perceived to be somewhat hawkish as the Committee did not alter its outlook to account for the impact from the partial government shutdown.

Although stocks slumped in reaction to the release, it should be noted today's weakness occurred after the S&P rallied more than 7.0% over the course of 15 sessions since October 8. Therefore, it is more likely the policy statement served as an excuse for the selling rather than a catalyst.

All ten sectors settled in the red, but their losses were limited to less than 0.8%. Defensive sectors led to the downside, and consumer staples (-0.8%) ended at the bottom of the leaderboard. Meanwhile, utilities (-0.7%) ended among the laggards despite seeing some intraday strength in reaction to above-consensus earnings from Exelon (EXC 28.55, +0.50).

Among cyclical groups, energy (-0.6%) and materials (-0.6%) trailed the S&P while industrials (-0.4%) and technology (-0.2%) outperformed.

Even though the tech sector ended ahead of the broader market, the tech-heavy Nasdaq (-0.6%) lagged as the iShares Nasdaq Biotechnology ETF (IBB 207.25, -4.35) lost 2.1%. With just one more session left in October, the biotech ETF is on track to end the month with a loss of 1.0% after gaining more than 50.0% so far this year.

Treasuries ended lower with the 10-yr yield up three basis points at 2.53%.

Trading volume was well below average as only 697 million shares changed hands on the floor of the New York Stock Exchange.

Looking back at today's economic data, the CPI increased 0.2% in September after ticking up 0.1% in August. The consensus expected headline CPI growth of 0.1%. Energy prices, which fell 0.3% in August, were up 0.8% in September. That was the strongest increase since prices rose 3.4% in June. Food prices were flat in September after increasing 0.1% for the previous two months. Unlike the PPI, there were no large moves in any one sector. Food price movements were generally weak, up or down, across the board.

Excluding food and energy, core CPI increased 0.1% in September for a second consecutive month. That was exactly what the consensus expected.

Separately, according to today's ADP National Employment Report, employment in the nonfarm private business sector rose by 130K in October. This was a bit above the increase of 125K expected by the consensus.

Lastly, the weekly MBA Mortgage Index rose 6.4% to follow last week's decline of 0.6%.

Tomorrow, October Challenger Job Cuts will be released at 7:30 ET and weekly initial claims will be reported at 8:30 ET. The day's data will be topped off with the 9:45 ET release of the Chicago PMI for October.

Russell 2000 +30.2% YTD
Nasdaq +30.2% YTD
S&P 500 +23.6% YTD
DJIA +19.2% YTD 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.