Day Traders Diary


Equity indices extended this week's losses with a broad-based retreat. The S&P 500 fell 0.6% to end the week lower by 1.1%, while the Russell 2000 (-1.1%) finished with a 0.9% decline since last Friday.

Staying true to the theme observed throughout the week, the energy sector (-1.5%) tumbled out of the gate, thus dragging the broader market down with it. Once again, dollar strength and crude oil weakness contributed to sector's underperformance, but the growth-sensitive group did not see any respite in the afternoon when the Dollar Index (-0.1%) edged lower, while oil made a short-lived appearance in the green. Late-afternoon weakness sent crude oil (-0.6%; $92.26/bbl) to its lowest level in almost a year, while the energy sector widened its September loss to 5.2%.

Meanwhile, the remaining sectors opened closer to their respective flat lines, but could not climb off those levels as the underperformance of small caps and the big loss in the energy sector kept dip-buyers sidelined. Furthermore, the recognition that next week will include an avalanche of global macro data and the latest FOMC policy decision also factored into the cautious approach.

Interestingly, the energy sector was the only cyclical group that ended behind the broader market. The top-weighted sectortechnologyshed 0.4% with the relative strength of Apple (AAPL 101.66, +0.23) masking the losses among high-beta chipmaker stocks. The PHLX Semiconductor Index lost 1.3%.

Elsewhere, the financial sector (-0.1%) lurked near its flat line throughout the session with Dow component Goldman Sachs (GS 183.17, +2.17) contributing to the relative strength. The stock added 1.2%, while the sector ended the week lower by 0.4%.

Things did not look much better on the countercyclical side where all four sectors settled behind the broader market. Consumer staples (-0.7%) and health care (-0.7%) registered comparable losses with the health care sector pressured by biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 269.57, -3.78) lost 1.4%.

The other twotelecom services (-1.2%) and utilities (-1.8%)were hampered by higher interest rates. Staying on that point, the 10-yr note retreated throughout the session to register a half-point loss. The benchmark yield rose six basis points to 2.61% after starting the week at 2.46%.

Also of note, the U.S. Treasury has announced a new set of sanctions on Russian banks, energy, and defense companies. The move followed a similar announcement from the European Union.

Today's session saw relatively strong participation with more than 675 million shares changing hands at the NYSE floor.

Economic data included Retail Sales, Import/Export Prices, Michigan Sentiment Survey, and Business Inventories:

Retail sales increased 0.6% in August following an upwardly revised 0.3% (from 0.0%), which matched the consensus
After missing expectations last month, sales rebounded in August and upward revisions were reported for the prior month (to 0.3% from 0.0%); concerns that consumption could weigh down GDP growth were somewhat alleviated.
Excluding motor vehicles, retail sales increased a respectable 0.3% for a second consecutive month and met the consensus expectations
Export prices, excluding agriculture, decreased 0.3% in August after increasing 0.3% in the prior reading
Excluding oil, import prices ticked up 0.1%, which followed last month's unchanged reading
The University of Michigan Consumer Sentiment Index increased to 84.6 in the preliminary September reading from 82.5 in August, while the consensus expected the index to increase to 83.5
That was the highest reading in the Sentiment Index since July 2013
The Present Conditions Index deteriorated in September, dropping from 99.8 in August to 98.5
The Expectations Index rose to 75.6 in September from 71.3 in August
Business inventories increased an in-line 0.4% in July after increasing by the same amount in June
Inventories for manufacturers (0.1%) and merchant wholesalers (0.1%) were known prior to the release. The only bit of new information was that retailer inventories increased 1.0% in July after increasing 0.7% in June
On Monday, the Empire Manufacturing Index for September will be released at 8:30 ET, while August Industrial Production and Capacity Utilization will be reported at 9:15 ET.

Nasdaq Composite +9.4% YTD
S&P 500 +7.4% YTD
Dow Jones Industrial Average +2.5% YTD
Russell 2000 -0.1% YTD

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