Day Traders Diary
3/28/14The stock market finished a cautious week on a modestly higher note, but kept only a portion of its opening gain. The S&P 500 added 0.5%, trimming its weekly loss to 0.5%, while the Nasdaq Composite added 0.1%, finishing the week with a 2.8% decline.
Emboldened by stimulus talk during the overnight session, equity indices began the day on a strong note with the Nasdaq leading the way. The tech-heavy index displayed early strength thanks to gains in biotechnology and other recently-battered momentum names. In all likelihood short covering played a part in the early advance that turned many recent laggards into leaders. One such area was the consumer discretionary sector, which added 0.8% for the day, but ended the week behind the remaining nine sectors with a loss of 2.1%.
Although the discretionary space held the bulk of today's gain, that was not the case with biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 229.38, -6.76) surged out of the gate and notched a high 15 minutes into the day before spending the remainder of the session in a steady retreat. Selling pressure intensified in the afternoon as the ETF dropped to yesterday's lows before settling with a loss of 2.9%.
The continued weakness in biotech pressured the health care sector (-0.4%) while other heavily-weighted groups ended mixed with respect to the broader market. Like the aforementioned consumer discretionary space, industrials (+0.7%) outperformed while financials (+0.4%) lagged. For its part, the largest S&P 500 sector, technology, ended in-line with the broader market.
Also of note, the energy sector (+1.2%) outperformed for the second day in a row, bringing its weekly gain to 2.5%. The sector drew strength from Dow component ExxonMobil (XOM 97.70, +1.46), which gained 1.5% while crude oil added 0.4% to $101.67/bbl.
On the countercyclical side, all four sectors ended behind the broader market. The telecom services (-0.1%) sector posted a modest loss while consumer staples (+0.4%) and utilities (+0.2%) registered gains.
Treasuries ended near their lows after retreating throughout the session. The benchmark 10-yr yield rose three basis points to 2.72%.
Trading volume was on the light side with just over 620 million shares changing hands at the NYSE.
Reviewing today's data:
Personal income increased 0.3% for a second consecutive month in February. The Briefing.com consensus expected income to increase 0.2%. As foretold in the employment report, wages and salaries were up 0.2% in February after increasing 0.3% in January. The Medicaid expansion from the implementation of the Affordable Care Act offset declines in unemployment insurance from the expiration of the emergency unemployment benefits. In all, government social benefits increased 0.8%. Personal spending met expectations, increasing 0.3% in February, up from a downwardly revised 0.2% (from 0.4%) in January.
The University of Michigan Consumer Sentiment Index was revised up to 80.0 in the final March reading from 79.9 in the preliminary reading (Briefing.com consensus 80.0). Sentiment is still below the 81.6 final reading from February. There was a divergence between the March Conference Board's Consumer Confidence and the University of Michigan Consumer Sentiment indicators. The Confidence Index jumped to a six year high on stronger future expectations while the respondents in the University of Michigan survey were much more subdued. Competing trends are nothing new, but they do discount the effectiveness of using these data points to predict future consumption growth.
On Monday, the Chicago PMI for March will be reported at 9:45 ET.
S&P 500 +0.5% YTD
Nasdaq Composite -0.5% YTD
Russell 2000 -0.9% YTD
Dow Jones Industrial Average -1.5% 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.