Day Traders Diary


The major averages ended their day little changed as investors evaluated a slew of quarterly earnings results against the potential implications of tomorrow's policy statement from the Fed. Additional focal points of today's trade included a rally in crude oil, weaker-than-expected economic data, and the underperformance of the heavily-weighted technology (-0.4%) and health care (-0.4%) sectors. The Nasdaq Composite (-0.2%) ended behind both the Dow Jones Industrial Average (+0.1%) and the S&P 500 (+0.2%).


Equity indices began the day modestly higher as investors weighed the effects of below-consensus March Durable Goods Orders (+0.8%; consensus +1.7%). The reading added another disappointing piece of economic news to the recent string of weaker-than-expected data. This in turn helped support the belief that the Fed is likely to hold off on hiking interest rates. Currently, the fed funds futures market calculates the odds of a rate hike resulting from the April meeting at zero percent.


The major averages trimmed their initial gain after April Consumer Confidence (94.2; consensus 96.7) also disappointed investors. Furthermore, this downturn in the major indices also corresponded to a leg lower in the heavyweight technology (-0.7%) and health care (-0.6%) sectors. The stock market ended on mixed a mixed note while five sectors ended in the red. Heavily-weighted technology (-0.4%) and health care (-0.4%) finished with the largest losses while energy (+1.4%), materials (+1.1%), industrials (+0.9%), and financials (+0.7%) topped the leaderboard.


In the technology space (-0.4%), large cap names demonstrated relative weakness as Microsoft (MSFT 51.44, -0.67) and Alphabet (GOOG 708.14, -15.01) traded lower ahead of Apple's (AAPL 104.35, -0.73) earnings report. Conversely, the high-beta chipmakers outperformed as the group moved higher with Micron Technology (MU 11.51, +0.96). Micron gained 9.1% after Mizuho released a research note that stated the company will likely benefit from its competitors' capital expenditure cuts.


Biotechnology underperformed in the health care space (-0.4%), evidenced by a loss of 1.6% in the iShares Nasdaq Biotechnology ETF (IBB 281.40, -4.55). The sub-group is pulling back from larger monthly gains, as the ETF trims its April advance to 7.9%. This compares to a gain of 5.2% in the broader sector over that period. Separately, Eli Lilly (LLY 76.27, -1.67) slipped 2.1% after its bottom-line missed analysts' estimates in the first quarter.


The energy space (+1.4%) outperformed as crude gained 2.9% ($43.94) ahead of this week's inventory data. In the group, independent oil and gas names outperformed as they moved higher in sympathy with BP (BP 33.49, +1.70). BP jumped 5.4% after beating bottom-line estimates on light revenue in the first quarter. Additionally, the company left its dividend unchanged at $0.10 per share. Dow component Exxon Mobil (XOM 87.63, +0.30) ended near its flat line after Standard & Poor's lowered its credit rating to "AA+" from "AAA." The ratings agency maintained a stable outlook for the energy company.


The U.S. Dollar Index (94.59, -0.25) finished its session off its low as traders shifted their attention back towards central bank meetings at the Fed and Bank of Japan. The euro/dollar pair ended higher by 0.2% at 1.1287 while the dollar finished lower by 0.2% against the yen (111.42).


The Treasury complex fell throughout the session as the yield on the 10-yr note rose three basis points to 1.94%.


Today's participation was above the recent average as more than 897 million shares changed hands on the NYSE floor.


Today's data included March Durable Goods Orders, February Case-Schiller 20-city Index, and April Consumer Confidence:


The Durable Goods Orders report for March this morning certainly validated the view that the FOMC isn't going to act at this week's meeting.

Specifically, durable goods orders increased 0.8% in March ( consensus +1.7%) after declining a downwardly revised 3.1% (from -2.8%) in February.

Excluding transportation, orders declined 0.2% ( consensus +0.5%) after declining a downwardly revised 1.3% (from -1.0%) in February.

New order activity in March was helped by a 65.7% increase in defense aircraft and parts, yet that increase was offset to a large extent by a 5.7% decline in nondefense aircraft and parts orders, a 3.0% decline in motor vehicle and parts orders, and a 1.6% decline in orders for fabricated metal products.

Machinery orders rose 0.5% after a 3.5% decline in February and primary metals orders jumped 0.8% on the back of a 0.2% decline in the prior month.

Nondefense capital goods orders, excluding aircraft -- a proxy for business spending -- were unchanged after declining 2.7% in February and are down 1.1% year-over-year.

Shipments of these same goods, which will count in the forecast for first quarter GDP, were up 0.3% after declining 1.8% in February and 1.4% in January.

Case-Shiller 20-city Home Price Index for February rose 5.4%, which fell below the consensus of 5.6%. This followed the previous month's unrevised reading of 5.7%.

The Conference Board's Consumer Confidence Index registered a 94.2 reading for April ( consensus 96.7) versus a downwardly revised 96.1 reading (from 96.2) for March. The cause of the dip was all about the outlook.

The Present Situation Index actually increased in April to 116.4 from 114.9 in March. The Expectations Index, however, fell to 79.3 from 83.6.

Comments from the Conference Board indicate the consumer's outlook has moderated. That moderation was attributed in part to feeling less optimistic about business conditions improving over the next six months, anticipating there will be fewer jobs, and not expecting, as much as before, that their incomes will increase.

The April reading was roughly flat with the 94.3 reading seen in April 2015.

Tomorrow's economic data will include the 7:00 ET release of the weekly MBA Mortgage Index. Meanwhile, Pending Home Sales ( consensus +0.3%) and the latest FOMC Rate Decision ( consensus 0.5%) will be released at 10:00 ET and 14:00 ET, respectively.


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