Day Traders Diary


The stock market charged higher on Thursday, erasing its entire decline from the early portion of the week. The S&P 500 spiked 1.5% while the Nasdaq Composite (+1.8%) outperformed.


The broad-based rally in the U.S. followed an overnight session that featured dovish comments from two European Central Bank members, setting expectations for more monetary easing from the central bank. This started with Vitor Constancio who spoke in Hong Kong, joining the chorus of voices calling on the Federal Reserve to delay its first rate hike while Ewald Nowotny said that more needs to be done by the ECB in light of soft inflation data.


The dovish remarks from two ECB policymakers weighed on the euro, sending the single currency lower by 0.8% against the dollar to 1.1383. To be fair, the Dollar Index (94.46, +0.47), which gained 0.5%, spiked to highs after the release of today's economic data, which included a 42-year low initial claims reading (255,000; consensus) and an in-line CPI report (+0.2%).


In addition to the flurry of economic data, investors received a fair batch of quarterly reports that were mostly in-line with expectations.


All ten sectors ended the day in the green with financials (+2.4%) leading the way. The influential sector was powered by Citigroup (C 52.97, +2.25) and Goldman Sachs (GS 184.96, +5.45) as the two heavyweights rallied 4.4% and 3.0%, respectively. Citigroup delivered a better than expected quarterly report while Goldman Sachs matched estimates.


The financial sector held the lead throughout the session while other groups shuffled around as the session wore on. When the dust settled, telecom services (+2.3%) and health care (+1.3%) ended not far behind financials with the health care sector rallying behind biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 314.76, +13.18) surged 4.4%, masking a 1.6% decline in the shares of UnitedHealth (UNH 59.33, -0.70), which followed a one-cent beat.


Elsewhere, the energy sector (+1.8%) finished among the leaders despite showing relative weakness in the early going. The early underperformance and the subsequent recovery followed the price action in the oil market as WTI crude was down more than 2.0% after the latest Energy Information Administration storage report showed that inventories remain near levels not seen at this time of the year for more than 80 years. However, the energy component staged a full recovery, ending the pit session lower by 0.6% at $46.38/bbl before returning to unchanged in electronic trade.


Also of note, the top-weighted technology sector (+1.3%) ended in a position of relative strength despite having a brief power outage in late morning action. That brief swoon was brought on by a pullback in chipmaker names following yesterday's M&A speculation. That being said, the PHLX Semiconductor Index still ended higher by 1.0%.


Treasuries ended the day on their session lows with the 10-yr yield rising four basis points to 2.03%.


Today's session generated the largest volume of the week with more than 933 million shares changing hands at the NYSE floor.


Economic data included Initial Claims, CPI, Empire Manufacturing, and Philadelphia Fed Survey:


The initial claims level declined to 255,000 for the week ending October 10 from a downwardly revised 262,000 (from 263,000) while the consensus expected an increase to 269,000

The claims level has returned to its mid-July mark, which represents the lowest level since November 1973

The continuing claims level fell to 2.158 million from an upwardly revised 2.208 million (from 2.204 million) while the consensus expected a decline to 2.200 million

The CPI declined 0.2% in September after decreasing 0.1% in August, which is what the consensus expected

The decline in prices was the result of a sizable drop in energy costs with total energy prices falling 4.7% in September after declining 2.0% in August

Gasoline prices declined 9.0% while food prices increased 0.4%

Excluding food and energy, core CPI increased 0.2% and ended two consecutive months of 0.1% gains. The consensus expected an increase of 0.1%

The Empire Manufacturing Survey for October registered a reading of -11.4, which was above the prior month's reading of -14.7, but below the consensus estimate, which was pegged at -8.0

The Philadelphia Fed's Business Outlook Survey increased to -4.5 in October from -6.0 in September while the consensus expected an increase to -2.5

While the headline index improved, nearly all of the sub-indices within the survey deteriorated on a month-to-month basis

Business managers claimed that activities were slightly improved in October, but stated overwhelmingly that trends in production, orders, and employment were worse off

Tomorrow, September Industrial Production ( consensus -0.2%) will be reported at 9:15 ET while August Job Openings and Labor Turnover Survey and the preliminary October Michigan Sentiment Index (consensus 88.4) will be released at 10:00 ET.


Nasdaq +2.8% YTD

S&P 500 -1.7% YTD

Dow Jones Industrial Average -3.8% YTD

Russell 2000 -3.4% YTD

All comments contained herein are for informational purposes only, and should not be considered as a solicitation to buy or sell any security. The firm does not guarantee the accuracy or completeness of the information or make any warranties regarding results from it's usage.