Day Traders Diary


The stock market ended its Thursday affair near its best level of the day thanks to daylong rallying. The last half hour saw a bit of selling pressure, but the S&P 500 settled within x points of its high. Today's rally occurred alongside a rebound in crude oil, while dovish remarks from St. Louis's Fed President James Bullard provided extra ammunition. The tech-heavy Nasdaq (+2.0%) lead the S&P 500 (+1.7%) and the Dow Jones Industrial Average (+1.4%).


Before the opening bell, JPMorgan Chase (JPM 58.20, +0.86) reported above-consensus Q4 earnings of $1.32 per share while revenue rose 0.6% year-over-year to $22.89 billion. During the company's conference call, JPMorgan addressed its first loan loss reserve build in six years, which was driven by downgrades, specifically in the company's oil and gas portfolio. The company went on to state that oil companies have been surprisingly resilient and that they expect to see a normal cycle increase as the economy looks "pretty good."


Elsewhere, St. Louis Fed President James Bullard stated that the "very substantial" decline in energy pricing has implications for monetary policy, but Mr. Bullard still believes that four rate hikes this year "sounds about right." Interestingly, stocks surged immediately following the comments, all but ignoring his unchanged outlook for the fed funds rate path. For its part, crude oil also built on its gain, ending its pit session higher by 2.6% at $31.22/bbl.


The strength in crude helped the energy sector (+4.5%) end in the lead while health care (+2.7%), technology (+2.0%), telecom services (+1.8%), and materials (+1.4%) followed.


In the energy space, Dow components Chevron (CVX 85.47, +4.14) and Exxon Mobil (XOM 79.12, +3.47) took advantage of the advance in oil, leading the index, with respective gains of 5.1% and 4.6%. Elsewhere in the energy space, pipeline companies Kinder Morgan (KMI 13.98 +1.03) and Williams Companies (WMB 18.29, +4.68) showed relative strength, climbing 8.0% and 34.4%, respectively. The pair had a strong showing despite a 5.7% decline in natural gas to $2.14/MMbtu.


Switching to the consumer discretionary space (+0.7%), the sector was anchored by large-cap components Home Depot (HD 119.62, -1.78) and Lowe's (LOW 69.91, +0.01) which underperformed with performances of -1.5% and unchanged, respectively. The cyclical sector was also hurt by continued weakness in Nike (NKE 58.51, -0.27) and Netflix (NFLX 107.06, +0.50).


Despite JPMorgan's above-consensus earnings, the financial sector (+1.0%) finished its day near the bottom of the board ahead of tomorrow morning's reports from Citigroup (C 45.38, +0.19), PNC (PNC 86.87, +0.97), and Wells Fargo (WFC 50.64, +0.91).


Looking at the top-weighted technology space, the high-beta chipmakers kept pace with the broader sector, evidenced by the 2.1% gain in the PHLX Semiconductor Index. Index component, Intel (INTC 32.74, +0.83) gained 2.6% ahead of the company's earnings release set for this evening.


Treasuries surrendered their slim overnight gains amid the rally in equities, leaving the 10-yr note unchanged with its yield at 2.09%.


True to recent form, trading volume was heavy with more than 1.2 billion shares changing hands at the NYSE floor.


Today's economic data included weekly Initial/Continuing Claims and December import/export prices:


The Initial Claims report showed that claims increased to 284,000 from last week's unrevised rate of 277,000 ( consensus 275,000)

This was above the consensus but within the 250,000-300,000 range that has held since July 2014.

The Department of Labor said there were no special factors influencing the latest initial claims reading, which pushed the four-week moving average up by 3,000 to 278,750.

Continuing claims for the week ending January 2 were 2.263 million, an increase of 33,000 from the previous week's revised level of 2.234 million (from 2.230 million).

The four-week moving average for continuing claims increased by 5,250 to 2.224 million.

Import prices excluding oil fell 0.4% in December after declining 0.2% in November

Export prices excluding agriculture decreased 1.0% in December after falling 0.6% in November

Tomorrow, December CPI ( consensus +0.1%), December Retail Sales ( consensus +0.1%) and January Empire Manufacturing Index ( consensus -3.5) will be reported at 8:30 ET. The December Industrial Production report ( consensus 77.5%) will cross the wires at 9:15 ET while November Business Inventories ( consensus +0.0%) and the preliminary reading of the Michigan Sentiment Index for January ( consensus 92.6) will both be released at 10:00 ET.


Russell 2000 -9.7% YTD

Nasdaq -7.8% YTD

Dow Jones -6.0% YTD

S&P 500 -6.0% YTD

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