Day Traders Diary


The major averages finished the Wednesday session on a cautious note with the S&P 500 falling 0.7%. The Dow Jones Industrial Average (-0.6%) outperformed while small caps bore the brunt of the pressure. The Russell 2000 declined 1.9% while the Nasdaq Composite fell 1.4%.
Equity indices began the day on an upbeat note, but the financial sector (-0.9%) served up an early warning by not taking part in the opening rally. One industry group that briefly participated in the early advance was the biotech space. The iShares Nasdaq Biotechnology ETF (IBB 235.09, -4.35) was up as much as 1.1% during the first hour of action, but faded from the early high, taking the market lower. Interestingly, the broader health care sector (+0.1%) finished the day ahead of the remaining nine groups.
Outside of the relative weakness in biotechnology, the lack of upward momentum in the likes of (AMZN 343.41, -11.30), Facebook (FB 60.38, -4.51), (PCLN 1188.77, -34.93), and Tesla (TSLA 212.96, -7.48) kept the tech-heavy Nasdaq behind the other indices. Facebook was the weakest performer out of the bunch, falling 6.9% after announcing the acquisition of Oculus VR for roughly $2 billion in cash and stock.
Staying on the technology theme, the maker of the "Candy Crush" game, King Digital Entertainment (KING 19.00, -3.50), had a forgettable market debut, falling 15.6% in its first session. Although the stock itself holds no sway over the broader market, the disappointing debut likely contributed to the defensive sentiment.
Elsewhere, another influential sectorindustrials (-0.9%)ended among the laggards as transports displayed broad weakness. The Dow Jones Transportation Average lost 1.6% after being unable to take out its 2014 closing high of 7592.36. All 20 index components posted losses with shipper Kirby (KEX 98.78, -3.71) leading the slide with a 3.6% loss.
Equities notwithstanding, the foreign exchange market also reflected a defensive posture as the Japanese yen strengthened, sending the dollar/yen pair below the 102.00 level.
Similarly, Treasuries rallied throughout the session while receiving a boost from a strong $35 billion 5-year note auction. The benchmark 10-yr yield fell five basis points to 2.69%.
With stocks ending on their lows, participants displayed demand for volatility protection, sending the CBOE Volatility Index (VIX 15.20, +1.18) higher by 8.4%.
Trading volume was a bit above average with nearly 738 million shares changing hands at the NYSE.
Today's economic data was limited to just two reports:
Durable goods orders increased 2.2% in February after falling a downwardly revised 1.3% (from -1.0%) in January. The consensus expected durable goods orders to increase 1.0%. The upward headline surprise does not represent a strengthening in demand from the manufacturing sector. A 6.9% increase in transportation goods provided most of the increase in February demand. Much of that was already known, as Boeing (BA 123.53, -0.49) reported 74 aircraft orders in February, up from 38 in January. Altogether, defense and nondefense aircraft orders increased 15.2%. Excluding transportation, durable goods orders increased a minor 0.2% in January. That was down from a downwardly revised 0.9% (from 1.1%) increase in January. The consensus expected these orders to increase 0.3%.
The weekly MBA Mortgage Applications Index fell 3.5% to follow last week's uptick of 0.2%.
Tomorrow, weekly initial claims ( consensus 330K) and the third estimate of Q4 GDP (consensus 2.6%) will be released at 8:30 ET while the Pending Home Sales report for February (expected -0.2%) will cross the wires at 10:00 ET.

S&P 500 +0.2% YTD
Nasdaq Composite -0.1% YTD
Russell 2000 -0.6% YTD
Dow Jones Industrial Average -1.9% YTD

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