Day Traders Diary
The stock market ended a volatile start to the week on a mixed note as a prolonged downturn in crude oil pressured equities. However, the broader market continued to show marked resilience to selling pressure as the S&P 500 (-0.1%) finished eight points off a freshly minted all-time intraday high (2178.29). Focal points impacting today's trade included strengthening in the dollar, an assortment of global manufacturing reports, bearish commentary from Goldman Sachs, and the outperformance of heavily-weighted technology (+0.4%) and health care (+0.6%). The Nasdaq Composite (+0.4%) finished ahead of the S&P 500 (-0.1%) and the Dow Jones Industrial Average (-0.2%).
U.S. equities began the day on a choppy note, responding to a negative bias in European averages. Regional bourses slipped as participants eyed mixed manufacturing readings out of China and a downward revision to the U.K.'s Manufacturing PMI for July (48.2; expected 49.1). Separately, Friday's stress test results from the European Banking Authority failed to elicit buying interest. The results came in largely as expected with Monte dei Paschi di Siena (BMDPF 0.386, +0.006) showing the weakest capital position.
The major averages marched off their opening levels shortly after the release of the ISM Index for July (52.6; Briefing.com consensus 53.1) and construction spending for May (-0.6%; Briefing.com consensus +0.7%). Both reports missed consensus estimates, but the ISM Index marked the fifth straight month of expansion for the manufacturing sector. The S&P 500 (-0.1%) pulled back shortly after notching a fresh all-time intraday high, succumbing to pressure from the oil patch. The energy component finished lower by 3.5% ($40.09/bbl; -$1.47), extending its decline from the June 8th closing high to 21.8%.
The benchmark index settled off its worst level of the day, buoyed by strength from the technology (+0.4%) and health care (+0.6%) sectors. Conversely, six sectors ended in the red with materials (-0.7%), telecom services (-1.0%), and energy (-3.3%) leading the downside.
The economically-sensitive financial sector (-0.2%) settled behind the broader market as money center banks and life insurance names underperformed. Citigroup (C 43.42, -0.39) and Bank of America (BAC 14.33, -0.16) lagged as they traded lower alongside European financial names like Deutsche Bank (DB 13.07, -0.37), which declined by 2.8%. The broader sector finished behind the benchmark index as investors look ahead to tomorrow's latest inflation reading. Separately, the Employment Situation Report for July is scheduled to cross the wires at 8:30 ET on Friday.
In the technology sector (+0.4%), heavily-weighted components Alphabet (GOOG 772.88, +4.09) and Apple (AAPL 106.05, +1.84) outperformed, gaining 0.5% and 1.8%, respectively. Both names reported positive bottom-line results last week. Apple also benefited from news that Uber and Didi Chuxing entered into a strategic agreement. The high-beta chipmakers settled slightly behind the broader sector, evidenced by the 0.2% gain in the PHLX Semiconductor Index.
Biotechnology demonstrated relative strength in the health care sector (+0.6%), as the iShares Nasdaq Biotechnology ETF (IBB 294.07, +4.63) jumped 1.6%. In the ETF, Regeneron Pharmaceuticals(REGN 434.00, +8.88) gained 2.1% after the European Medicines Agency agreed to review the company's sarilumab medication. Biogen (BIIB 301.83, +11.90) outperformed after Phase-3 trial results of nusinersen met their primary endpoints.
The U.S. Dollar Index (95.77, +0.24) ended off its best level of the day as the greenback gained against the euro, pound, and yen. The single currency slipped 0.1% against the dollar (1.1166) while sterling lost 0.4% against the buck (1.3180). Separately, the safe-haven yen lost 0.3% against the dollar (102.37).
Treasuries settled lower as volatility in equities failed to elicit much buying interest in the bond market. The yield on the 10-yr note rose five basis points to 1.51%.
Participation was above the recent average as more than 829 million shares changed hands on the NYSE floor.
Today's economic data was limited to the July ISM Index and Construction Spending for June:
Tomorrow's economic data will include Personal Income (Briefing.com consensus +0.3%) and Personal Spending (Briefing.com consensus +0.3%) reports for June and Core PCE Prices for June (Briefing.com consensus +0.2%), which will each cross the wires at 8:30 ET. Separately, Auto & Truck Sales for July will be released throughout tomorrow's session.