Day Traders Diary



The stock market ended the Tuesday affair on a higher note as positive quarterly results from Netflix (NFLX 118.79, +18.99) and a few other bellwethers stoked risk appetite in the broader market. The tech-heavy Nasdaq (+0.9%) finished ahead of both the S&P 500 (+0.6%) and the Dow Jones Industrial Average (+0.4%).

The third-quarter earnings reporting season picked up in earnest this morning as participants pored over reports from the likes of Netflix (NFLX 118.79, +18.99), UnitedHealth (UNH 143.39, +9.26), Goldman Sachs (GS 172.63, +3.63), IBM (IBM 150.72, -4.05) and Johnson & Johnson (JNJ 115.41, -3.08). All five names topped bottom-line estimates for the quarter, but the results were met with mixed reactions.

A positive bias in global markets and some mixed inflation data also contributed to today's upbeat demeanor.

European markets outperformed on the heels of an above-consensus inflation reading out of the UK. The UK's September Consumer Price Index (CPI) increased to a two-year high of 1.0% year-over-year (expected: +0.9%). However, CPI data from the US came in slightly mixed relative to consensus estimates. Total CPI rose 0.3% in September ( consensus +0.3%) while core CPI, which excludes food and energy, rose by 0.1% ( consensus +0.2%).

The latest domestic inflation data led to some minute adjustments to U.S. rate hike expectations, but they were largely walked back by the end of the day. The response was fairly muted as participants assessed progress towards the Fed's long-run inflation target of 2.0%. Total CPI and core CPI are up a respective 1.5% and 2.2% year-over-year. 

The Tuesday advance lost some steam in the final hour as the S&P 500 (+0.6%) narrowed its gain into the close. 

All eleven S&P 500 sectors finished in the green with health care (+1.1%), materials (+0.9%), utilities (+0.8%), financials (+0.8%), and technology (+0.7%) leading the pack. 

The health care space (+1.1%) paced the advance as managed health names drafted higher alongside Dow component UnitedHealth (UNH 143.39, +9.26). The stock finished atop the price-weighted average after beating analysts' estimates for the quarter and issuing above consensus full-year guidance. Conversely, Johnson & Johnson (JNJ 115.41, -3.08) declined by 2.6% despite beating bottom-line estimates for the quarter. 

Biotechnology names finished slightly ahead of the broader health care sector as the iShares Nasdaq Biotechnology ETF (IBB 269.43, +3.71) gained 1.4%, The ETF narrowed its October loss to 6.9%. 

In the consumer discretionary space (+0.6%), Netflix (NFLX 118.79, +18.99) spiked 19.0% after handily beating earnings and net subscriber growth estimates. 

Fellow F.A.N.G. members gained following the upbeat report as Facebook (FB 128.57, +1.03), Amazon (AMZN 817.65, +4.70), and Alphabet (GOOG 795.26, +15.30) advanced between 0.6% and 2.0%.

The influential technology sector (+0.7%) finished slightly ahead of the broader market as chipmakers outperformed. Intel (INTC 37.75, +0.46) gained 1.2% ahead of this evening's quarterly earnings report. On the flipside, IBM (IBM 150.72, -4.05) lost 2.6% despite beating estimates.

Treasuries finished on a higher note as yields pulled back across the curve. The yield on the 2-yr note declined one basis point to 0.81% while the yield on the benchmark 10-yr note settled lower by two basis points (1.74%). 

Today's trading volume fell below the average of 858 million as 742 million shares changed hands at the NYSE floor.

Today's economic data included the CPI Report for September and the NAHB Housing Market Index for October: 

  • The all items index was up 0.3% in September, which was in-line with expectations, while the all items index, excluding food and energy, was up 0.1% ( consensus +0.2%).
  • The NAHB Housing Market Index for October came in at 63 ( consensus 59.0) from an unrevised 65 in September.

Tomorrow's economic data will include the 7:00 ET release of the the weekly MBA Mortgage Index. Separably, Housing Starts ( consensus 1168k) and Building Permits ( consensus 1164k) for September will each cross the wires at 8:30 ET. The day's data will be capped off with the release of the Fed's Beige Book for October at 14:00 ET. 

  • Russell 2000: +7.2% YTD
  • Nasdaq Composite: +4.7% YTD
  • S&P 500: +4.7% YTD
  • Dow Jones: +4.2% YTD 

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