Day Traders Diary


The stock market started the first full week of September on a cautious note. The S&P 500 lost 0.3%, but the relative strength of small cap stocks helped the Russell 2000 (+0.2%) and Nasdaq Composite (+0.2%) finish ahead of the benchmark index.

Equity indices struggled from the get-go with the overall risk sentiment dampened by continued dollar strength that sent the US Dollar Index (+0.54, 84.28) near its best level of the year. The greenback surged on the back of yen weakness following a downward revision to Japan's Q2 GDP (to -7.1% from -6.8%), while also drawing strength from weakness in the British pound. The pound fell to 1.6110 from 1.6330 against the greenback after a weekend YouGov poll revealed majority support for Scottish independence with the referendum coming up on September 18.

Conversely, the dollar strength weighed on commodities with gold futures falling 0.9% to $1255.80/ozt. Similarly, crude oil also retreated, testing its 2014 low, before narrowing its loss to 0.7% by the pit close. The energy component settled at $92.64/bbl, but continued its rebound in electronic trading.

The early weakness in crude contributed to a defensive start for the energy sector (-1.6%), which ended near its worst level of the session. Dow components Chevron (CVX 126.21, -1.19) and ExxonMobil (XOM 97.77, -1.49) posted respective losses of 0.9% and 1.5% as the stronger dollar and cheaper oil weighed on earnings prospects of the two multinational giants.

Energy notwithstanding, other sectors ended much closer to their flat lines. The consumer discretionary sector (-0.5%) weighed amid weakness in the shares of Ford (F 16.80, -0.34) and General Motors (GM 33.24, -1.04) after Morgan Stanley downgraded the U.S. auto sector.

Elsewhere, the consumer staples sector (-0.6%) was pressured by Campbell Soup (CPB 43.39, -1.15), which fell 2.6% in reaction to an in-line report and disappointing guidance. Manufacturers of cosmetics also lagged after the CEO of L'Oreal (LRLCY 32.60, -0.73) made cautious comments about the industry. Peers Avon Products (AVP 13.66, -0.18) and Estee Lauder (EL 75.59, -1.19) lost 1.3% and 1.6%, respectively.

On the upside, the technology sector (+0.2%) outperformed throughout the session, which underpinned the Nasdaq. Top-weighted components like Google (GOOGL 601.63, +3.85), Microsoft (MSFT 46.47, +0.56), and Intel (INTC 35.33, +0.33) posted gains between 0.6% and 1.2%, while the top index member by weightApple (AAPL 98.35, -0.62)lost 0.6%.

High-beta Nasdaq components also provided a measure of support with the PHLX Semiconductor Index adding 0.2% and the iShares Nasdaq Biotechnology ETF (IBB 273.06, +2.46) climbing 0.9%. Meanwhile, the broader health care sector (+0.1%) ended just above its flat line.

Treasuries rallied overnight, but spend the day in a steady retreat. The 10-yr note shed four ticks to boost its yield to 2.47%.

Participation remained light with fewer than 590 million shares changing hands at the NYSE floor.

Economic data was limited to the Consumer Credit report for July, which pointed to a $26.00 billion increase from an upwardly revised $18.80 billion (from $17.30 billion) in June, while the consensus expected an increase of $17.40 billion.

Tomorrow's data will be limited to the Job Openings and Labor Turnover Survey, which will be released at 10:00 ET.

Nasdaq Composite +10.0% YTD
S&P 500 +8.3% YTD
Dow Jones Industrial Average +3.2% YTD
Russell 2000 +0.7% YTD

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