Day Traders Diary


The stock market ended the midweek session on an upbeat note with the Nasdaq Composite providing leadership. The tech-heavy index advanced 0.8%, while the S&P 500 added 0.4% with seven sectors posting gains.

Equities were driven into the red shortly after the open due to notable weakness in the energy sector. The growth-sensitive group was down in excess of 1.0% during the first hour of action, but narrowed its loss to 0.3% by the close. For its part, crude oil fell 1.1% to $91.71/bbl, ending the pit session at its lowest level since early January.

While the continued weakness in crude prices weighed on the sector, which is now down 4.1% for the month, the persistence of dollar strength also contributed negatively to earnings prospects of multinational companies like Chevron (CVX 124.28, -0.90) and ExxonMobil (XOM 96.81, -0.58). The Dollar Index (84.22, -0.06) climbed to its best level in 14 months before slipping in the early afternoon. The greenback retreated against the British pound after latest poll results from Scotland indicated majority support for staying in the UK (weekend YouGov poll gave a slight edge to the pro-independence movement). The pound/dollar pair climbed to 1.6210 after trading at 1.6070 in the early morning.

Despite the early weakness in the energy sector, equity indices were able to climb off their lows with help from top-weighted financials (+0.4%), health care (+0.7%), and technology (+0.8%). The three groups began the day ahead of the broader market and their strength pulled dip-buyers into the fray.

The technology sector finished in the lead with Apple (AAPL 101.00, +3.01) fueling the strength. The top-weighted sector component jumped 3.1%, while social media names also did some heavy lifting. Twitter (TWTR 52.91, +2.30) rallied 4.5% following an upgrade at UBS, while Facebook (FB 77.43, +0.76) and Yelp (YELP 82.64, +1.76) gained 1.0% and 2.2%, respectively.

Elsewhere, health care received significant support from biotechnology as the iShares Nasdaq Biotechnology ETF (IBB 274.41, +4.93) jumped 1.8%, which factored into the strong showing for the Nasdaq Composite.

Also of note, the industrial sector (+0.1%) was pushed into the green during afternoon action by the relative strength of defense contractors. The PHLX Defense Index added 0.7%, while transport stocks could not keep up with the broader market. The Dow Jones Transportation Average added 0.1%.

Treasuries slumped overnight and spent the duration of the session near their lows. The 10-yr note shed eight ticks to send its yield higher by three basis points to 2.54%.

Participation was a bit light with fewer than 600 million shares changing hands at the NYSE floor.

Economic data was limited to just two data points:

The weekly MBA Mortgage Index fell 7.2% to follow last week's uptick of 0.2%
Wholesale inventories increased 0.1% in July following a downwardly revised 0.2% (from 0.3%) increase in June
The consensus expected an increase of 0.5%
Overall, wholesale sales increased 0.7% in July after increasing by 0.4% in June
Tomorrow, weekly initial claims ( consensus 300K) will be released at 8:30 ET, while the Treasury Budget for August (expected deficit of $129 billion) will cross the wires at 14:00 ET.

Nasdaq Composite +9.8% YTD
S&P 500 +8.0% YTD
Dow Jones Industrial Average +3.0% YTD
Russell 2000 +0.1% YTD

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