Day Traders Diary


The stock market finished the Wednesday session on an upbeat note with the Nasdaq (+1.3%) ending in the lead. The S&P 500 settled higher by 1.1% with all ten sectors posting gains.
The benchmark index spent the entire trading day in the green, rallying to new highs during the last hour of action. The tech-heavy Nasdaq, meanwhile, briefly dipped into the red during morning action, but was able to recover swiftly.
Stocks began the trading day with modest gains after the overnight session featured the release of China's Q1 GDP. Although the report could be classified as better-than-feared, it did not necessarily produce a clear-cut signal as the year-over-year reading of 7.4% beat estimates (7.3%), while the quarter-over-quarter growth of 1.4% was just below expectations (1.5%).
When the opening bell rang at the New York Stock Exchange, the Dow and S&P 500 maintained relatively narrow ranges through the first two hours of action, while the Nasdaq slipped below its flat line due to weakness among chipmakers. The largest industry player, Intel (INTC 26.93, +0.16), reported a slim earnings beat, but other semiconductor names struggled. The broader PHLX Semiconductor Index shed 0.2%.
Even though chipmakers knocked the Nasdaq into the red, the index was able to overcome that weakness due to the relative strength of biotechnology and recently-battered momentum names. The iShares Nasdaq Biotechnology ETF (IBB 222.79, +5.18) jumped 2.4%, ending just above its 200-day moving average (219.97) after struggling with that level for the past week.
Interestingly, the broader health care (+0.6%) sector did not follow biotech's lead as several large components weighed. UnitedHealth (UNH 78.19, -1.32) contributed to the underperformance, falling 1.7% after receiving a downgrade from Citigroup ahead of its earnings report, which will be released ahead of tomorrow's opening bell.
Elsewhere among influential sectors, consumer discretionary (+1.4%), energy (+1.2%), and industrials (+1.5%) provided support to the broader market, while financials (+0.9%) lagged. The economically-sensitive sector was pressured by Bank of America (BAC 16.13, -0.26), which lost 1.6% after missing bottom-line estimates. The financial sector will be in focus once again tomorrow with the market digesting quarterly results from American Express (AXP 87.40, +1.36), Goldman Sachs (GS 157.22, +2.30), and Morgan Stanley (MS 29.89, +0.34).
On the countercyclical side, health care (+0.6%) ended at the bottom of the leaderboard, while consumer staples (+0.9%), telecom services (+0.9%), and utilities (+0.8%) had some difficulty keeping up with the broader market.
Treasuries settled modestly lower following a range bound session. The benchmark 10-yr yield ticked up one basis point to 2.64%.
Participation was below average as 661 million shares changed hands at the NYSE.
Reviewing today's data:
Housing starts increased 2.4% in March to 946,000 from an upwardly revised 920,000 in February. The consensus expected 955,000 new starts. Overall, the residential construction report was encouraging, but did not provide any evidence that the weakness in January and February was weather related. Starts remained well below 1.00 million, which was the average in the fourth quarter. Had weather factored into the weakness, then there should have been a much stronger bounce from delayed starts. Single-family construction, which languished below 600,000 in January and February, rebounded 6.0% to 635,000. That was more in-line with the trends over the last 12 months. Multifamily starts fell 3.1% to 311,000 in March from 321,000 in February. That was a typical decline from a normally volatile sector.
Industrial production increased 0.7% in March after increasing an upwardly revised 1.2% (from 0.6%) in February. The consensus expected industrial production to increase 0.5%. Manufacturing production increased 0.5% in March, down from an upwardly revised 1.4% (from 0.9%) in February. The March gain was in-line with the ISM production index. Despite a 0.8% decline in motor vehicles and parts production, durable goods manufacturing production increased 0.5%. Nondurable goods manufacturing production increased 0.7%, which was mostly the result of a 3.3% increase in petroleum and coal products production.
Tomorrow, weekly initial claims ( consensus 312K) will be reported at 8:30 ET and the Philadelphia Fed Survey for April (consensus 8.6) will be released at 10:00 ET.

S&P 500 +0.8% YTD
Dow Jones Industrial Average -0.9% YTD
Russell 2000 -2.6% YTD
Nasdaq Composite -2.2% YTD

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