Day Traders Diary


The stock market finished the week on a broadly lower note with the Nasdaq and S&P 500 enduring their worst week since 2012. The Nasdaq Composite fell 1.3%, ending the week with a loss of 3.1%. For its part, the S&P 500 settled lower by 1.0% to end the week down 2.7%.
Equity indices faced selling activity at the open after the overnight session failed to deliver any noteworthy respite following yesterday's drubbing. The lack of a concerted rebound effort today likely fed into concerns that the stock market is in the midst of a larger degree price correction than what participants have grown accustomed to seeing the past few years.
Despite starting in the red, the major averages spent the initial 90 minutes of action in a dash towards their flat lines. The S&P 500 and Nasdaq were able to make a brief appearance in the green with help from biotechnology, while the Dow spent the entire day in the red.
The iShares Nasdaq Biotechnology ETF (IBB 215.45, -6.44) appeared to have found support at its 200-day moving average in the morning, but the modest morning rebound was met with daylong selling that drove the ETF to a fresh session low. The ETF lost 2.9%, while the health care sector fell 1.1%.
Biotech notwithstanding, other momentum names that comprise a portion of the consumer discretionary sector (-1.4%) and a good part of the technology space (-1.2%) were weak once again. (AMZN 311.73, -5.38), Google (GOOG 530.60, -10.35), Netflix (NFLX 326.71, -8.02), and LinkedIn (LNKD 165.78, -4.21) lost between 1.7% and 2.5%, to name a few.
Even though the Nasdaq and S&P 500 made short-lived appearances in the green, the Dow Jones Industrial Average (-0.9%) was unable to do so as JPMorgan Chase (JPM 55.30, -2.10) and top-weighted component, Visa (V 196.63, -4.92), weighed. Visa sank 2.4% while JPMorgan Chase plunged 3.7% after missing earnings estimates on below-consensus revenue. The financial sector (-1.2%), meanwhile, ended among the laggards. The sector was kept from logging additional losses due to a 0.8% gain in Wells Fargo (WFC 48.08, +0.37), which reported above-consensus earnings.
On a separate note, shares of Herbalife (HLF 51.48, -8.36) took a dive in the final hour of action, falling 14.0% after The Financial Times reported that a criminal probe has been launched into the company's business practices.
On the fixed income side, Treasuries were little changed overnight, but began climbing during the early morning hours. The 10-yr note added eight ticks, pressuring its yield to 2.62%.
Participation was a bit above average as nearly 800 million shares changed hands at the NYSE.
Reviewing today's data:

Producer prices jumped 0.5% in March, the largest monthly increase since June, after falling 0.1% in February. The consensus expected the PPI to increase 0.1%. We would not categorize the forecasting miss as a big surprise. The consensus is having difficulty forecasting the PPI following the methodology change. Under the previous PPI methodology, price growth for finished goods was down 0.1%. That was in line with expectations. The entire increase in producer prices was the result of a bounce in prices for final demand for services. After declining 0.3% in February, these prices increased 0.7%, which was the largest monthly gain since January 2010.
The University of Michigan Consumer Sentiment Index increased to 82.6 in the preliminary reading for April from 80.0 in March. That was the strongest sentiment reading since July 2013. The consensus expected the index to increase to 81.0. Consumer sentiment typically follows changes in the equity markets, unemployment, and gasoline prices. The surveys were filled out prior to the recent weakness in the stock market, so equity prices enhanced sentiment in the preliminary reading. If the market does not rebound, we would expect the final reading to be notably lower. The Expectations Index increased to 97.1 in the preliminary reading for April from 70.0 in March. The Present Conditions Index increased to 97.1 from 95.7.
On Monday, the Retail Sales report for March will be released at 8:30 ET while February Business Inventories will be announced at 10:00 ET.

S&P 500 -1.8% YTD
Dow Jones Industrial Average -3.3% YTD
Nasdaq Composite -4.2% YTD
Russell 2000 -4.3% YTD

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