Day Traders Diary



The major averages trade on a moderately lower note at midday as participants weigh a disappointing policy statement from the European Central Bank against a rebound in crude oil futures. The Nasdaq Composite (-0.4%) trades behind the Dow Jones Industrial Average (-0.2%) and the S&P 500 (-0.2%).

Equities began the day under pressure as participants responded to the September policy statement from the European Central Bank and somewhat hawkish commentary from ECB President Mario Draghi. The central bank opted to maintain its monetary policy stance, maintaining interest rates at record lows and holding its asset purchase program steady at EUR80 billion. Furthermore, Mr. Draghi noted that the central bank did not see a need to expand its asset purchase program for the time being. The policy statement fell short of expectations as participants remained hopeful for some hints of more easing on the way.

The benchmark index pared opening losses in the first hour as a rally in crude oil bolstered the broader market. The energy component gained overnight after the American Petroleum Institute reported a larger-than-expected draw in crude oil inventories. Crude oil extended its gain after the Department of Energy confirmed the bullish reading with its more influential inventory data. The EIA reported that crude oil stockpiles declined by 14.51 million barrels (consensus: +0.22 million) while gasoline inventories fell by 4.21 million barrels (consensus: -0.71 million). At this juncture, WTI crude trades higher by 4.0% ($47.34/bbl, +$1.84).

The S&P 500 (-0.2%) floats above its 20-day simple moving average (2180.54), maintaining position in the middle of today's trading range. Seven sectors trade in the red with consumer discretionary (-0.7%) and technology (-0.9%) demonstrating relative weakness. Conversely, financials (+0.1%), health care (+0.1%), and energy (+1.6%) outperform.

The economically-sensitive financial sector (+0.1%) demonstrates relative strength as the group responds to some steepening in the yield curve. In the group, money center banks and investment brokerages outperform as Citigroup (C 47.89, +0.41) gains 0.9%. Separately, Dow component Goldman Sachs (GS 171.47, +1.80) leads the price-weighted index. The broader sector has narrowed its week-to-date loss to 0.1%.

Biotechnology demonstrates relative strength in the health care space (+0.1%), evidenced by the 0.8% gain in the iShares Nasdaq Biotechnology ETF (IBB 288.27, +2.17). In the ETF, Alexion Pharmaceuticals (ALXN 129.69, +4.61) has gained 3.5%. Meanwhile, Eli Lilly (LLY 79.96, +1.37) has rallied 1.7% after being upgraded to "Overweight" at JP Morgan.

In the technology sector (-0.9%), Dow component Apple (AAPL 105.71, -2.64) underperforms, losing 2.4%. The name rounds out the price-weighted index after the company announced that it will not release iPhone 7 pre-orders figures. The company stated that the reading is not a representative metric, but reaffirmed its fourth-quarter guidance. Chipmakers trade slightly ahead of the broader sector as the PHLX Semiconductor Index ticks down 0.1%.

The consumer discretionary (-0.7%) space demonstrates relative weakness as Dow component Nike (NKE 56.37, -1.35) underperforms. The stock has declined 2.5% after being downgraded to "Neutral" from "Overweight" at Piper Jaffray. Macy's (M 36.12, -1.07) has declined 2.9% while the broader SPDR S&P Retail ETF (XRT 44.54, -0.22) is down 0.5%.

Treasuries trade lower with the long end of the curve demonstrating relative weakness. The yield on the 10-yr note has increased six basis points (1.60%) while the yield on the 2-yr note has gained two basis points (0.76%).

Today's economic data included weekly initial claims: 

  • Initial claims for the week ending September 3 dipped by 4,000 to 259,000 ( consensus 265,000).
    • The latest report marked the 79th straight week that initial claims have been below 300,000 and it dropped the four-week moving average for the series to 261,250 from 263,000.
  • Continuing claims for the week ending August 27 decreased by 7,000 to 2.144 million.
    • The four-week moving average for continuing claims fell to 2.154 million from 2.158 million.

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