Day Traders Diary


The stock market is mixed at midday with the Dow Jones Industrial Average (+0.2%) defending a modest gain while the Nasdaq (-0.4%) and S&P 500 (-0.2%) trade lower.

Equity indices have endured a choppy first half of the session after yesterday's 1.4% slide sent the S&P 500 below its 100-day moving average (2,010). The benchmark index distanced itself from that level at the start of today's session, but was able to find a measure of support in the 1,990 area, which represents the lowest level of the year.

The energy sector (-1.2%) fueled the early retreat as crude oil failed to hold its morning gain. The energy component was up near 0.7%, but is now lower by 1.2% at $43.92/bbl after setting a fresh January low.

Meanwhile, most of the remaining cyclical sectors have held up relatively well with the exception of technology (-0.4%). Disappointing guidance from Qualcomm (QCOM 62.74, -8.25) has the stock trading lower by 11.6% while other influential sector members trade mixed. Google (GOOGL 506.80, -5.63) has given up 1.1% while Apple (AAPL 117.20, +1.89) trades higher by 1.7%.

Qualcomm's sharp decline has contributed to the underperformance of the Nasdaq Composite with the index also pressured by Alibaba's (BABA 89.28, -9.17) below-consensus revenue. The stock has tumbled 9.3%, but the discretionary sector (+0.3%) has been able to overcome that loss thanks to better than expected earnings from Coach (COH 38.81, +2.35), Ford (F 14.68, +0.22), and news indicating McDonald's (MCD 92.69, +3.91) will replace its retiring Chief Executive Officer.

Similar to the discretionary sector, financials (+0.2%), materials (+0.4%) and utilities (+0.6%) outperform while health care (-0.3%) and telecom services (-0.6%) lag.

Treasuries have followed yesterday's surge with a steady slide that has the 10-yr yield higher by four basis points at 1.76%.

Economic data was limited to jobless claims and pending home sales:
  • The initial claims level dropped to 265,000 for the week ending January 24 from an upwardly revised 308,000 (from 307,000) while the consensus expected a decline to 301,000 
    • Not only did the drop break three consecutive weeks above 300,000, but the initial claims level fell to its lowest level since April 2000 
    • As it has for the past several months, the Department of Labor reported that there were no special factors impacting the report 
    • The continuing claims level declined to 2.385 million from an upwardly revised 2.456 million (from 2.443 million) while the consensus expected a drop to 2.429 million 
  • Pending home sales for December fell 3.7% while the consensus expected an increase of 0.6%

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