Day Traders Diary


The stock market ended Wednesday on a higher note, but not before making a couple appearances in the red. The S&P 500 added a modest 0.3% while the Nasdaq Composite (+0.8%) outperformed.

Equity indices climbed out of the gate with the Nasdaq receiving major support from biotechnology. Meanwhile, the S&P 500 notched its session high during the initial 30 minutes, but returned to its flat line shortly thereafter amid significant weakness in the energy sector (-1.0%).

The growth-sensitive energy space was pressured by a tailspin in crude oil futures after latest data from the American Petroleum Institute revealed that crude inventories increased by 10.9 million barrels since last week. As a result, total inventories have reached levels not seen at this time of the year in at least 80 years. WTI crude fell 6.5% to $50.44/bbl, erasing its Tuesday advance, and cutting into its gain from Monday.

Unlike energy, most of the remaining cyclical sectors ended near their flat lines while the consumer discretionary sector (+0.9%) outperformed after showing relative weakness yesterday. Today, however, the group enjoyed broad support, including relative strength among homebuilders. The iShares Dow Jones US Home Construction ETF (ITB 28.41, +0.40) climbed 1.4%.

Elsewhere, the health care sector (+0.9%) also displayed strength throughout the day, which was largely due to biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 352.01, +10.09) outperformed from the get-go and extended its gain after Mylan (MYL 68.36, +8.79) announced a proposal to acquire Perrigo (PRGO 195.00, +30.29) for $205/share. The news sent shares of PRGO higher by 18.4% while the biotech ETF advanced 3.0% and kept the Nasdaq in the lead.

Similar to biotechnology, the high-beta chipmaker space contributed to Nasdaq's strength with the PHLX Semiconductor Index advancing 0.7%. However, the technology sector (+0.2%) ended a bit behind the broader market following mixed action in large cap names. Google (GOOGL 548.84, +3.98) added 0.7% while Apple (AAPL 125.60, -0.41) lost 0.3% after Societe Generale downgraded the stock to 'Hold' from 'Buy.'

Treasuries ended the day on a modestly lower note with the 10-yr yield rising one basis point to 1.90%. The benchmark yield saw little reaction to the afternoon release of FOMC minutes that provided little clarity regarding the timing of the first rate hike.

According to the minutes, FOMC members were split over whether June would be the right time to begin raising rates. Several members believed that recent data and the outlook warranted a rate hike in June while others voiced concerns that the economic outlook would not be strong enough to support a rate hike in the near term.

The dollar was also discussed in the minutes with participants acknowledging that net exports would be hampered by the strong greenback. In addition, a few members voiced their belief that the dovish tone emanating from global central banks could lead to additional dollar strength.

Fittingly, the Dollar Index (98.02, +0.19) erased its intraday loss in reaction to the minutes, adding 0.2% for the day.

Today's participation was close to recent averages with roughly 750 million shares changing hands at the NYSE floor.

Economic data reported this morning was limited to the weekly MBA Mortgage Index, which ticked up 0.4% to follow last week's 4.6% increase.

Tomorrow, weekly Initial Claims ( consensus 285K) will be released at 8:30 ET while the Wholesale Inventories report for February will cross at 10:00 ET (expected 0.2%).
  • Russell 2000 +4.9% YTD 
  • Nasdaq Composite +4.5% YTD 
  • S&P 500 +1.1% YTD 
  • Dow Jones Industrial Average +0.5% YTD

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