Day Traders Diary

11/8/16

The major averages ended the Tuesday affair on a modestly higher note as participants awaited tonight's conclusion of a contentious US election cycle. The Nasdaq Composite (+0.5%) finished ahead of both the Dow Jones Industrial Average (+0.4%) and the S&P 500 (+0.4%).

Equity indices spun their wheels at the start of the session as rising bond prices and a modest loss in the U.S. Dollar Index (97.95, +0.17, +0.17%) signaled caution ahead of this evening's election results. The pause proved to be short-lived, however, as yesterday's risk rally resumed after the opening hour. Growth-sensitive groups and crude oil led the advance during this time, benefiting from some pre-election positioning.

The broader market maintained the positive tone into the afternoon amid speculation that Hillary Clinton would come away victorious despite the recent FBI scare. Recall that yesterday the S&P 500 snapped a nine-session losing streak after FBI Director James Comey confirmed that he will not recommend pursuing criminal charges against Democratic presidential nominee Hillary Clinton for mishandling of classified information and the use of a private email server. At the same time, market and political pundits suggested that the market also gained on the assumption that the GOP could manage to retain control of one, if not both houses, of Congress. The resulting gridlock would be welcomed by the market while a clean sweep by either party would lead to more uncertainty.

The broader market wavered in the last two hours of action, but the S&P 500 still settled in the top half of today's range. Ten of eleven sectors finished with gains, paced by defensively-oriented utilities (+0.7%) and telecom services (+0.6%). Heavily-weighted consumer discretionary (+0.6%) and industrials (+0.5%) followed.

Travel and leisure names outperformed in the consumer discretionary space (+0.6%) as Priceline Group (PCLN 1578.13, +97.80) rallied 6.6%. The company beat top- and bottom-line estimates for the quarter. Shares of Marriott (MAR 73.02, +1.92, +2.7%) also outperformed after the hotel operator beat consensus estimates for their quarter. However, it is worth noting that the company also issued cautious fourth-quarter earnings guidance.

In the industrial sector (+0.5%), machinery names outperformed with Dow components Caterpillar (CAT 84.68, +0.93) and 3M (MMM 171.03,+ 1.29) gaining 1.7% and 0.8%, respectively. Separately, the Dow Jones Transportation Average (UNCH) finished flat even though UPS (UPS 112.03, +2.23) climbed 2.0%.

Biotechnology finished in-line with the health care sector (+0.2%), evidenced by the 0.2% gain in the iShares Nasdaq Biotechnology ETF (IBB 261.62, +0.45). Mylan (MYL 37.11, +0.52) gained 1.4%, shrugging off reports that members of the Senate Judiciary Committee are calling on the Federal Trade Commission to bring antitrust charges against the company.

The commodity-sensitive energy sector (UNCH) inched lower despite rising crude oil futures. WTI crude ended up 0.3% ($44.95/bbl; +$0.13) ahead of this evening's inventory data from the American Petroleum Institute. The Department of Energy will release its more influential inventory data tomorrow morning at 10:30 ET.

Treasuries finished on a lower note as the short end of the curve underperformed. The yield on the 2-yr note finished higher by three basis points (0.85%) while the yield on the 10-yr note also ended up three basis points (1.86%).

Today's trading volume was above the average of 861 million as more than 869 million shares changed hands at the NYSE floor.

Today's economic data was limited to the Job Openings and Labor Turnover Survey for September:

The September Job Openings and Labor Turnover Survey showed that job openings came in at 5.486 million from a revised 5.453 million (from 5.443 million) in August.

Tomorrow's economic data will include the 7:00 ET release of the weekly MBA Mortgage Index and the 10:00 ET release of Wholesale Inventories for September (Briefing.com consensus +0.2%).

Russell 2000: +5.5% YTD

Dow Jones: +5.2% YTD

S&P 500: +4.7% YTD

Nasdaq Composite: +3.7% YTD