Day Traders Diary


The stock market ended the Thursday session on a higher note after erasing its opening decline. The S&P 500 climbed 0.9% while the Nasdaq Composite (+0.4%) underperformed throughout the day.


Equity indices struggled at the start of the trading day, responding to a mixed overnight session that featured losses among most Asian indices while European stocks fought to end the day with modest gains. The advance in Europe followed the release of the latest policy meeting minutes from the European Central Bank, which stressed that a lot more stimulus still has to work its way through the financial system.


Once the U.S. session got going, stocks spent the first half in the red as heavily-weighted technology (+0.5%) and health care (+0.4%) struggled; however, the two sectors were lifted off their lows during afternoon action as the S&P 500 climbed above its 50-day moving average (1,995).


The afternoon rebound accelerated after the release of the September FOMC minutes, which revealed that only one Committee member believed that economic conditions do not warrant a rate hike while other members believed that a rate hike will be appropriate before the end of 2015. Despite the majority view regarding the timing of the first rate hike, several members expressed concern over downside risks to inflation.


Treasuries saw an immediate spike in reaction to the minutes, but they quickly slid to new lows where they ended the day with the 10-yr yield rising four basis points to 2.11%. Meanwhile, the Dollar Index (95.31, -0.18) briefly fell to lows, but returned to its early afternoon levels shortly thereafter.


All ten sectors ended the day in the green with commodity-sensitive energy (+1.9%) and materials (+1.4%) continuing their recent outperformance. The two sectors extended this week's gains to 8.6% and 6.8%, respectively, while crude oil spiked 3.3% to $49.45/bbl.


Elsewhere among cyclical sectors, the consumer discretionary space (+1.2%) ended among the leaders with shares of Netflix (NFLX 114.93, +6.83) surging 6.3% after the company announced it will raise the price of its streaming service by 11.1%.


Staying on the cyclical side, the top-weighted technology sector (+0.5%) erased its loss by the close thanks to the broad strength. Lost in the shuffle was a 4.7% spike in EMC (EMC 27.18, +1.22) after The Wall Street Journal reported the company could be on track to merge with Dell.


Similar to technology, the health care sector (+0.4%) erased its opening loss during the afternoon; however, biotech names struggled into the close with the iShares Nasdaq Biotechnology ETF (IBB 307.20, -0.59) ending lower by 0.2% after being down 3.6% in the early going.


Today's participation was below recent totals as fewer than 900 million shares changed hands at the NYSE floor.


Economic data was limited to weekly Initial Claims, which declined to 263,000 from a downwardly revised 276,000 (from 277,000) while the consensus a decline to 275,000. As a result, the four-week moving average has dipped to 267,500 from 270,500, which is the lowest level since the first week of August. These levels continue to support the idea that the economy is at full employment.


Tomorrow, September Import/Export Prices will be reported at 8:30 ET while the August Wholesale Inventories report will be released at 10:00 ET ( consensus 0.0%).


Nasdaq Composite +1.6% YTD

S&P 500 -2.2% YTD

Dow Jones Industrial Average -4.3% YTD

Russell 2000 -3.4% YTD

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