Day Traders Diary
The stock market ended the Wednesday affair on a flat note as the broader market spent most of the session consolidating after its recent rally. The S&P 500 (UNCH) ended its day narrowly above its flat line, extending its winning streak to a fourth session. Additional factors impacting today's trade included a downturn in oil, softening in the dollar, a rebound in safe havens, and the underperformance of the heavily-weighted consumer discretionary (-0.5%) and technology (-0.1%) sectors. The Dow Jones Industrial Average (+0.1%) ended ahead of the benchmark index (UNCH) and the Nasdaq Composite (-0.3%).
U.S. equities began the day on a choppy note, responding to a weakening rally overseas. European markets ended their session on a flat note as investors looked ahead to a Thursday policy meeting at the Bank of England. Governor Mark Carney previously stated that policy meetings over the next two months should be viewed as one meeting, raising concerns that the central bank will not offer further easing measures until August. Additionally, crude oil added to the cautious tone after the American Petroleum Institute reported a surprise crude oil build in its weekly inventory report (+2.2 million barrels; last: -6.73 million barrels).
The major averages ebbed lower throughout the morning as investors ruminated over the Department of Energy's latest stockpile data. The Energy Information Administration reported that crude oil inventories declined by 2.54 million barrels, compared to the estimated 2.95 million barrel draw. Furthermore, the report also showed that gasoline inventories rose by 1.21 million barrels, compared to the estimated 0.43 million barrel draw. In response, WTI crude extended its decline, ending the day lower by 4.0% ($44.87/bbl; -$1.87).
Equity indices ticked higher in the afternoon, essentially ignoring the release of the Fed's Beige Book for July. The Beige Book reported that economic activity continued to expand at a modest pace, but that inflationary pressures remained subdued. The major indices finished off their best levels of the day with seven sectors in the green. The defensively-oriented telecom services (+0.8%), utilities (+0.8%), and consumer staples (+0.5%) ended in the front of the pack while energy (-0.7%), consumer discretionary (-0.5%), and technology (-0.1%) rounded out the board.
In the consumer discretionary space (-0.5%), Michaels Stores (MIK 27.13, -1.75) underperformed after announcing that it would conduct a secondary stock offering of 11 million shares. The company also lowered its second-quarter guidance below analysts' estimates. Elsewhere, heavyweight Amazon (AMZN 742.63, -5.58) declined by 0.8% after yesterday's "Prime Day" sale. However, the company reported that worldwide orders increased by 60.0% year-over-year.
The economically-sensitive financial sector (UNCH) ended its day near its flat line as investors looked ahead to key earnings reports later in the week. On that note, JPMorgan Chase (JPM 63.16, -0.04) will report tomorrow morning while Citigroup (C 43.33, -0.11) and Wells Fargo (WFC 48.27, -0.08) will both release their earnings ahead of Friday's opening bell.
The Dow Jones Transportation Average (+0.7%) displayed relative strength as rail names outperformed. In the group, CSX (CSX 28.21, +1.19) jumped 4.4% after the company reported a bottom-line beat on in-line revenue. The company released its report early, looking to clarify incorrect information that was released via Twitter. On the flipside, airlines underperformed as the group pulled back from their yesterday's rally. Delta Air Lines (DAL 39.56, -0.65) slipped 1.6% ahead of tomorrow morning's earnings call.
The U.S. Dollar Index (96.32, -0.12) ended near its high as the buck gained ground against commodity currencies and the pound. The dollar/Canadian dollar pair finished higher by 0.5% (1.2977) while sterling lost 0.8% against the greenback (1.3138).
Treasuries enjoyed a bid throughout today's session as yields fell throughout the complex. The yield on the 10-yr note settled at 1.47%, sliding four basis points.
Today's trading volume was below the recent average as fewer than 815 million shares changed hands on the NYSE floor.
Today's economic data included the weekly MBA Mortgage Index, Import/Export Prices for June, and the Treasury Budget for June:
Tomorrow's economic data will include weekly initial claims (Briefing.com consensus 265k) and Core PPI for June (Briefing.com consensus 0.1%), which will each be released at 8:30 ET.