Day Traders Diary


The stock market ended the midweek session on a broadly higher note with the Nasdaq Composite leading the way. The tech-heavy Index spiked 1.8% while the S&P 500 (+1.6%) followed not far behind, charging back above its 200-day moving average (2,065).


Equity indices climbed out of the gate, continuing their steady charge into the afternoon and through the release of FOMC minutes from the October meeting, which left little doubt that the Fed is poised to raise rates at the December meeting. Specifically, the minutes indicated that "it may well become appropriate to initialize the normalization process at the next meeting, provided that unanticipated shocks do not adversely affect the economic outlook."


To be fair, it would be hard to categorize the statement as hawkish if one were to judge solely based on the market's reaction to the commentary as Treasuries charged back to unchanged (10-yr yield 2.27%) while the dollar ticked lower against the euro.


All ten sectors ended the day in positive territory with eight groups adding more than 1.0%. The financial sector (+1.8%) settled near the top of the leaderboard, driven higher by solid gains among the likes of Bank of America (BAC 17.84, +0.41), Citigroup (C 54.98, +1.49), and JPMorgan Chase (JPM 67.45, +1.32). The three names gained between 2.0% and 2.8%, benefiting from rising rate hike expectations.


Elsewhere, the energy sector (+1.6%) also posted a solid gain, but not before seeing some intraday volatility. The commodity-sensitive group led at the start, but made a brief appearance in the red amid a late-morning pullback in crude oil. WTI crude ended higher by 0.4% at $41.95/bbl after sliding from its session high near $41.53/bbl. Interestingly, the pullback developed after the latest storage report from the Energy Information Administration showed a smaller than expected inventory build (252,000 barrels; expected 2.0 million barrels).


Staying on the cyclical side, the top-weighted technology sector (+1.6%) settled in line with the broader market, masking a 3.2% spike in the shares of Apple (AAPL 117.29, +3.60), which was brought on by news that Goldman Sachs added the stock to its Conviction Buy List. Also of note, the PHLX Semiconductor Index gained 1.0%, overshadowing an 8.5% surge in Fairchild Semiconductor (FCS 19.40, +1.52) after the company agreed to be acquired by ON Semiconductor (ON 9.89, -0.85) for $20/share.


Over on the countercyclical side, the health care sector (+2.0%) spent the bulk of the session in a position of relative strength while consumer staples (+1.4%), telecom services (+0.8%), and utilities (+0.7%) underperformed. As for health care, the sector was boosted by biotechnology, evidenced by a 2.9% spike in iShares Nasdaq Biotechnology ETF (IBB 338.74, +9.60), which registered its fourth consecutive advance.


Today's participation was ahead of average as more than 850 million shares changed hands at the NYSE floor.


Economic data reported this morning was limited to Housing Starts and MBA Mortgage Index:


The October Housing Starts report was a disappointment as starts declined 11.0% to a seasonally adjusted annual rate of 1.060 million units from a downwardly revised 1.191 million in September (from 1.206 million)

The consensus expected a reading of 1.173 million

The downturn was driven by a 25.1% decline in multifamily starts, which followed on the heels of an 18.1% increase in September. A natural pullback was expected after the big September increase, yet the drop was more pronounced than many had thought.

There wasn't a pickup in single-family starts either as they dropped 2.4% to 722,000, led by a 6.9% decline in the South

The weekly MBA Mortgage Index rose 6.2% to follow last week's 1.3% decline

Tomorrow, weekly Initial Claims ( consensus 272,000) and the November Philadelphia Fed Survey (expected -1.0) will be reported at 8:30 ET while the October Leading Indicators report (consensus 0.6%) will be released at 10:00 ET.


Nasdaq Composite +7.2% YTD

S&P 500 +1.2% YTD

Dow Jones Industrial Average -0.5% YTD

Russell 2000 -2.6% YTD

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