Day Traders Diary


The stock market registered its second consecutive retreat on Wednesday with the S&P 500 losing 0.4%. The benchmark index managed to cut its loss in half by the closing bell while the Nasdaq Composite (-0.3%) outperformed. The tech-heavy Nasdaq remains higher by 0.1% week-to-date while the S&P 500 is down 0.3% since the end of last week. 

For the second day in a row, the market opened amid broad pressure, but heavily-weighted health care and technology sectors hit their lows during the opening hour and climbed off those lows into the afternoon. The health care sector (+0.4%) registered a modest gain while technology (-0.3%) finished ahead of most other cyclical sectors.

Biotechnology contributed to the outperformance of the health care sector with the iShares Nasdaq Biotechnology ETF (IBB 340.09, +2.17) climbing 0.6%. In addition, the high-beta group helped the Nasdaq stay ahead of the broader market while chipmakers also displayed relative strength with the PHLX Semiconductor Index shedding 0.1%. Meanwhile, large cap components of the tech sector ended on a mixed note. Apple (AAPL 128.54, -0.82) lost 0.6% while Facebook (FB 80.90, +1.30) added 1.6%.

Elsewhere among cyclical sectors, energy (-0.2%) settled among the outperformers despite a late-morning slide to lows after the EIA storage report showed that crude inventories increased by 10.3 million barrels from the prior week. Like the sector, crude oil fell to lows on the news, but came back roaring to end the pit session higher by 1.9% at $51.50/bbl.

Also of note, the consumer discretionary sector (-0.6%) lagged throughout the session with Lumber Liquidators (LL 35.64, -5.14) tumbling 12.6% after the Senate Committee on Commerce, Science, and Transportation took interest in the company following reports it imported laminate flooring containing significant amounts of formaldehyde.

Over on the countercyclical side, the health care sector represented the lone outperformer while consumer staples (-0.8%), telecom services (-1.2%), and utilities (-0.6%) lagged throughout the trading day.

Treasuries notched their highs in the morning, but surrendered those gains in the early going, and spent the afternoon near the unchanged level. The 10-yr note ended flat with its yield at 2.12%.

Today's participation was in-line with recent trends as roughly 705 million shares changed hands at the NYSE floor.

Economic data included ADP Employment, ISM Services, and MBA Mortgage Index:
  • The ADP National Employment Report revealed that employment in the nonfarm private business sector rose by 212K in February while the consensus expected an increase of 220K 
    • The January reading was revised up to 250,000 from 213,000 
  • The ISM Non-Manufacturing Index increased to 56.9 in February from 56.7 while the consensus expected a drop to 56.5 
    • The improvement in the headline index comes despite weakness in production and orders. The Business Activities/Production Index fell to 59.4 from 61.5 while the New Orders Index declined to 56.7 from 59.5 
  • The weekly MBA Mortgage Index ticked up 0.1% to follow last week's 3.5% decline 
Tomorrow, the Challenger Job Cuts report for February will be released at 7:30 ET while weekly Initial Claims ( consensus 295K) and Q4 Productivity (consensus -2.3%)/Unit Labor Costs data (consensus 2.9%) will be released at 8:30 ET. The day's data will be topped off with the 10:00 ET release of the January Factory Orders report (consensus 0.6%).
  • Nasdaq Composite +4.9% YTD 
  • Russell 2000 +2.3% YTD 
  • S&P 500 +1.9% YTD 
  • Dow Jones Industrial Average +1.5% YTD


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