Day Traders Diary
4/9/14The stock market finished the Wednesday session on a sharply higher note, with the Nasdaq Composite (+1.7%) in the lead.
Equity indices held solid gains into the afternoon, with a second push coming after the release of the FOMC Minutes from the March policy meeting. For the most part, the minutes reiterated several points that were already known, but market participants zeroed in on a specific portion that commented on the expected trajectory of the fed funds rate.
Specifically, the minutes revealed that policymakers are not necessarily committed to hiking the fed funds rate in the first half of 2015. While that timetable could still come to fruition, it is becoming increasingly clear that the FOMC is unwilling to back itself into a corner by providing calendar-based guidance. That proved to be a relief for the stock and bond markets, while pressuring the dollar.
Treasuries cut the bulk of their losses after the release of the minutes, with the benchmark 10-yr yield ending at 2.69% after hovering near 2.72% in the early afternoon. Elsewhere, the Dollar Index (-0.3%) slumped to lows, while gold futures recovered their losses, clawing back to the 1309.00/ozt level.
Eight of ten sectors posted gains, with health care (+2.1%) ending in the lead after showing strength throughout the session. Since the advance was powered by many of the recent laggards, it is not a stretch to suspect that short covering fueled a significant part of the rally.
Biotechnology was a big contributor to the gains in health care as the iShares Nasdaq Biotechnology ETF (IBB 235.08, +9.25) surged 4.1%. It is worth mentioning that the strength of biotech also gave a boost to the Nasdaq.
The tech-heavy Nasdaq also received support from many recently-battered momentum names. Facebook (FB 62.41, +4.22) and LinkedIn (LNKD 176.18, +7.08) surged 7.3% and 4.2%, respectively, while discretionary components Amazon.com (AMZN 331.80, +4.74) and Netflix (NFLX 353.03, +4.14) posted gains close to 1.3% apiece. The broader discretionary sector (+1.1%), meanwhile, ended in line with the S&P 500.
Although three of four top-weighted sectors fared as well, or better than, the benchmark index, financials (+0.9%) were a reluctant participant in the advance.
On the downside, telecom services (-0.7%) and utilities (-0.3%) were the only two sectors ending in the red.
Participation was a bit below average as less than 690 million shares changed hands at the NYSE.
Today's economic data was limited to the Wholesale Inventories report, which pointed to an increase of 0.5% in February after increasing an upwardly revised 0.8% (from 0.6%) in January. The Briefing.com consensus expected wholesale inventories to increase 0.5%. There were concerns that strong inventory growth in February would be the result of severe winter weather conditions. In theory, the extreme cold would keep shoppers away, which would result in more goods being left on the shelves. That notion has been debunked in just about all of the economic data over the last several weeks, including the February wholesale inventory data. Sales, which should have weakened from weather effects, increased 0.7% in February after falling 1.8% in January.
Tomorrow, weekly initial claims (Briefing.com consensus 325K) and March Import/Export Prices will be released at 8:30 ET, while the Treasury Budget for March (Briefing.com consensus -$36.0 billion) will cross the wires at 14:00 ET.
S&P 500 +1.3% YTD
Nasdaq Composite +0.2% YTD
Russell 2000 -0.1% YTD
Dow Jones Industrial Average -0.8% 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.