Day Traders Diary


 The stock market ended Thursday relatively flat as some interest rate volatility and some caution ahead of the September employment report on Friday kept a lid on things. The Dow Jones Industrial Average (-0.1%) and the Nasdaq Composite (-0.2%) settled slightly behind the S&P 500 (+0.05%).

Long-term interest rates continued their recent climb despite some dovish-sounding minutes from the European Central Bank's (ECB) September meeting and accommodative jawboning from ECB Vice President Vitor Constancio.

Mr. Constancio briefly rallied global bond markets when he denied reports from earlier in the week that suggested the central bank has held discussions about tapering its asset purchase program. That headline boost proved to be short-lived, however, as Treasury prices soon started to fade again, pushing yields back up.

The yield on the benchmark 10-yr note, which slipped back to 1.71% after the Constancio headline first hit, finished higher by four basis points at 1.74%.

The stock market took the afternoon boost in long-term rates in stride.  While there weren't any big gains (or losses) from a sector standpoint, the real estate (+0.2%), consumer staples (+0.1%), utilities (unch), and telecom services (-0.1%) sectors, otherwise known as "yield plays," held up reasonably well and finished off their worst levels of the day.  Those four groups have lost between 1.6% and 3.7% this week, with the 10-yr note yield climbing 14 basis points since last Friday's close.

Stock market participants, by and large, showed limited conviction ahead of Friday's employment report.

The Employment Situation Report for September is in focus as participants try to assess the fed funds rate hike picture for the remainder of the year. The consensus expects the jobs report to show that 176,000 positions were added to nonfarm payrolls and that average hourly earnings increased 0.2%. The report is slated to cross the wires on Friday at 8:30 a.m. ET, which is when the media should also be busy reporting on Hurricane Matthew, a Category 4 storm that is expected to hit Florida's east coast Thursday night.

Six sectors ended in the green today with materials (+0.8%) and technology (+0.2%) leading the advance. Today's trade also featured an uptick in crude oil ($50.44/bbl; +$0.68; +1.4%) and weakness in the heavily-weighted health care (-0.4%) space.

Biotechnology underperformed inside the health care sector (-0.4%) as the iShares Nasdaq Biotechnology ETF (IBB 284.16, -6.64) fell 2.3%. Alnylam Pharmaceuticals (ALNY 36.21, -34.09) pressured the group after it announced that it was discontinuing Revusiran developments. The stock plunged 48.5% on the news. Mylan (MYL 36.84, -1.19) underperformed amid continued scrutiny of its EpiPen. Reports indicated that the company misclassified the device under the Medicaid Drug Rebate program.

The financial sector (+0.1%) outperformed as a steepening in the yield curve was seen as improving the earnings potential for the group. The SPDR S&P Bank ETF (KBE 34.20, +0.03) rose 0.1%, extending its weekly gain to 2.4%. MetLife (MET 47.15, +1.16) jumped 2.5% after confirming that Brighthouse Financial filed forms with the SEC to distribute common stock to MetLife shareholders. This is a crucial step in MetLife's plan to separate into two publicly traded companies.

In the technology space (+0.2%), top-weighed Apple (AAPL 113.89, +0.84) gained 0.7% after Canaccord Genuity issued a bullish note on iPhone sales. On the flipside, Twitter (TWTR 19.87, -5.00) tumbled 20.2% after reports signaled that Apple (AAPL 113.89, +0.84), Alphabet (GOOG 776.86, +0.39), and Disney (DIS 92.83, +0.38) are unlikely to pursue bids for Twitter.

Today's participation was below the recent average as more than 796 million shares changed hands at the NYSE floor.

Today's economic data was limited to Challenger Job Cuts for September and weekly initial claims: 

September Challenger Job Cuts reported in at 44,300, which compares to the prior month's reading of 32,200.

For the week ending October 1, initial claims decreased by 5,000 to 249,000 ( consensus 258,000).

Continuing claims for the week ending September 24 fell by 6,000 to 2.058 million.

For more on these economic releases, be sure to visit's Economic Calendar page.

Tomorrow's economic data will include the 8:30 a.m. ET release of the Employment Situation Report for September. The consensus expects the report to show an increase of 176,000 in nonfarm payrolls. Meanwhile, August Wholesale Inventories ( consensus -0.1%) and August Consumer Credit ( consensus$18.0 billion) will cross the wires at 10:00 a.m ET and 3:00 p.m. ET, respectively.


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