Day Traders Diary


The major averages ended Friday on a quiet note with the S&P 500 (unch) locking in a 0.7% gain for the week. Meanwhile, the tech-heavy Nasdaq (-0.1%) spent the duration of the day in negative territory to end the week unchanged.

This morning, the latest Nonfarm Payrolls report revealed the addition of 214,000 jobs in October. The reading came in below the consensus estimate (235,000), but the overall tone of the report did not represent a departure from recent trends. Furthermore, the data did not stoke up fears of the Fed being in a rush to hike the fed funds rate. To that point, the 10-yr note rallied, sending its yield lower by eight basis points to 2.30% while the Dollar Index (87.58, -0.44) took a step back from its best level since mid-2010. The index narrowed its weekly gain to 0.7%.

The weaker dollar served as a supportive factor for crude oil, which climbed 1.0% to $78.71/bbl. Fittingly, the strength helped the energy sector (+0.9%) finish ahead of the remaining cyclical groups. Similarly, the materials space (+0.5%) was also supported by commodities. The Market Vectors Gold Miners ETF (GDX 18.64, +1.43) jumped 8.3% as gold futures soared 2.8% to $1174.70/ozt. Steelmakers gave another boost to the sector after industry giant ArcelorMittal (MT 12.59, +0.21) reported better than expected revenue, which overshadowed below-consensus earnings. Shares of MT spiked 1.7% while the Market Vectors Steel ETF (SLX 41.94, +0.87) rallied 2.1%.

Meanwhile, the remaining cyclical sectors struggled to keep pace with the market. The consumer discretionary sector (-0.2%) lagged throughout the session with Dow component Disney (DIS 90.00, -2.00) falling 2.2% despite reporting a one-cent beat.

The top-weighted technology sector (-0.03%) also spent the day in the red with chipmakers facing broad pressure. NVIDIA (NVDA 19.79, -0.43) and Skyworks (SKWS 59.88, -2.26) reported their quarterly results, but above-consensus earnings from the former and in-line results from the latter could not stop the PHLX Semiconductor Index from surrendering 0.9%.

The high-beta weakness was also apparent in the biotech space as the iShares Nasdaq Biotechnology ETF (IBB 290.14, -3.18) lost 1.1% and contributed to the underperformance of the Nasdaq. As for health care (-1.0%), the sector ended behind the remaining nine groups with DaVita (DVA 74.49, -3.54) and Humana (HUM 130.58, -9.29) contributing to the weakness. The two registered respective losses of 4.5% and 6.6% after DaVita beat by a penny and Humana missed on earnings and revenue.

Elsewhere among countercyclical groups, consumer staples (+0.3%), telecom services (+0.8%), and utilities (+1.0%) settled ahead of the broader market.

Participation was ahead of average with more than 750 million shares changing hands at the NYSE floor.

Economic data included Nonfarm Payrolls and Consumer Credit:

Payrolls increased by 214,000 while the consensus expected a reading closer to 235,000
Although payroll growth exceeded the 200,000 mark for the ninth consecutive month, earnings growth remained anemic, increasing just 0.1% ( consensus 0.2%)
The combination of a historically low labor force participation rate and jobless claims steadily tracking below the 300,000 mark should lead to robust growth, but businesses remain reluctant to step up hiring
The Consumer Credit report for September showed an increase of $15.90 billion, which was lower than the consensus estimate of $16.00 billion
There is no economic data scheduled to be released on Monday.

Nasdaq Composite +10.9% YTD
S&P 500 +9.9% YTD
Dow Jones Industrial Average +6.0% YTD
Russell 2000 +0.9% YTD

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