Day Traders Diary
The stock market ended a downbeat week on a lower note as equities pulled back following continued weakness from the retail sub-group. Additional focal points included the S&P 500 (-0.9%) breaching technical support at its 50-day simple moving average (2054.74), mounting selling pressure from the oil pit, a leg higher in the dollar, and weakness from the heavyweight financial (-1.3%), industrial (-1.2%), and consumer discretionary (-1.2%) sectors. The Dow Jones Industrial Averages (-1.1%) finished behind the S&P 500 (-0.9%) and the tech-heavy Nasdaq (-0.4%).
The major averages opened on a mixed note as investors weighed a positive reading of April Retail Sales (+1.3%; Briefing.com consensus +0.8%) against continued weakness in the retail space. Reports from Nordstrom (JWN 39.16, -6.07) and Dillard's (DDS 59.86, -0.78) capped off a bad week for the group as both offered below-consensus results for their quarters.
Equities were unable to find their bearings as a persistent downturn in crude oil and strength in the dollar kept pressure on the broader market. The S&P 500 (-0.9%) tested and defended support near its 50-day simple moving average (2054.74) in the late morning, but was unable to do so again when retesting that level in the early afternoon.
The major averages ebbed lower through the afternoon as heavily-weighted financials (-1.3%), industrials (-1.2%), and consumer discretionary (-1.2%) extended their losses to round out the leaderboard. For its part, WTI crude ended its week on a down note ($46.22/bbl; -0.9%), but still finished with a gain of 3.7% since last Friday's settlement at $44.59/bbl.
In the industrial sector (-1.2%), rail names ended with larger losses as Norfolk Southern (NSC 85.97, -2.21) and Kansas City Southern (KSU 87.97, -2.21) finished the day lower by 2.5% apiece. The industrial group showed broad-based weakness as construction machinery names and aerospace and defense names all ended with meaningful losses. Furthermore, the Dow Jones Transportation Average (-1.2%) erased its 2016 gain and is now flat for the year.
The financial sector (-1.3%) saw weakness in money center banks and real estate investment trusts (REITs). The largest losses among REITs came from those with primary holdings in retail properties. The names moved lower during the week as they traded lower with the SPDR S&P Retail ETF (XRT 41.04, -0.57). Simon Properties (SPG 196.49, -5.95) and General Growth (GGP 27.67, -0.46) extended their weekly declines to 6.8% and 5.9%, respectively.
Retail names continued to underperform in the consumer discretionary space (-1.2%). Nordstrom (JWN 39.16, -6.07) ended its day lower by 13.4%, finishing the week down 18.5%. Elsewhere, Macy's (M 31.22, +0.01) and Kohl's (KSS 35.74, +0.59) outperformed.
Conversely, health care (-0.2%) and technology (-0.3%) finished the day with the slimmest losses. In the health care space (-0.2%) biotechnology showed relative strength, evidenced by the 0.9% gain in the iShares Nasdaq Biotechnology ETF (IBB 253.90, +2.17).
Treasuries ended on a mixed note with the 10-yr note ending near its best level of the session. The yield on the 10-yr note slipped five basis points to 1.70%.
Volume was heavier than average with 854 million shares trading at the NYSE. The advance-decline line favored decliners at the NYSE by a 2-to-1 margin.
Today's economic data included Core PPI for April, Retail Sales for April, March Business Inventories, and the preliminary reading of the University of Michigan Consumer Sentiment Survey for May:
Monday's economic data will be limited to Empire Manufacturing for May (Briefing.com consensus 6.2) and the May NAHB Housing Market Index (Briefing.com consensus 59), which will be released at 8:30 ET at 10:00 ET, respectively. Separately, March Net Long-Term TIC Flows will be released at 16:00 ET.