Day Traders Diary


The stock market ended the Tuesday affair on a higher note as investors continued to adjust their post-election positioning. The Nasdaq Composite (+1.1%) finished well ahead of the S&P 500 (+0.8%) while the Dow Jones Industrial Average (+0.3%) lagged, but still notched its seventh consecutive gain. The three indices have rallied between 1.7% and 4.3% so far in November.


The Dow Jones Industrial Average (+0.2%) began the day under pressure as some mild profit taking developed. Large cap names that make up the price-weighted average have seen a stream of inflows in recent days as speculation mounts regarding increased US fiscal spending. This, in turn, has driven up inflation expectations.


The reflationary trade has boosted sectors more directly linked to the potential implementation of large-scale public works projects -- financials (+0.1%; month-to-date: +12.2%), industrials (+0.3%; month-to-date: +7.3%), and materials (+0.4%; month-to-date: +3.5%) -- while pressuring rate-sensitive groups -- telecom services (+2.1%; month-to-date: -1.2%) and utilities (+1.7%; month-to-date: -5.6%). Today's action, however, saw a bounce for sectors that were oversold on a short term basis.


The bond market also enjoyed a reprieve from short-term oversold conditions. The yield on the 2-yr note finished flat at 1.00% while the yield on the benchmark 10-yr note declined three basis points to 2.23%. The yield on the 2-yr note is up 15 basis points from October's settlement while the yield on the benchmark 10-yr note has gained 40 basis points so far in November. The Treasury complex shrugged off largely upbeat economic data and somewhat hawkish jawboning from Federal Reserve officials.


The energy sector (+2.7%) finished in the lead as crude oil futures rebounded. WTI crude finished the day higher by 5.9% ($45.87/bbl; +$2.57) ahead of this evening's inventory data from the American Petroleum Institute. The Department of Energy will also release weekly stockpile data tomorrow at 10:30 ET.


In the technology sector (+1.3%), large cap tech names rebounded from recent selling interest. Alphabet (GOOG 758.49, +22.41) and Facebook (FB 117.20, +2.12) gained a respective 3.0% and 1.8%. The two have been under pressure in recent days as market leadership shifted away from F.A.N.G. names. Top-weighted Apple (AAPL 107.11, +1.40) added 1.3%, narrowing its post-election loss to 3.6%. Separately, the PHLX Semiconductor Index settled higher by 1.9%.


The economically-sensitive financial sector (+0.1%) finished at the bottom of the leaderboard, but still extended its November gain to 12.2%. The sector has been bolstered by the reflationary trade in recent sessions as sharp steepening in the yield curve boosted the group's earnings prospects. Furthermore, speculation has arisen that the sector may face less regulation under President-elect Trump's administration. The SPDR S&P Bank ETF (KBE 40.20, +0.20) finished higher by 0.5% after beginning the day with a 2.4% loss. The broader sector is up 2.3% so far this week.


Biotechnology pulled back from its recent gain as the iShares Nasdaq Biotechnology ETF (IBB 290.91, -2.18) slipped 0.7%. The sub-industry has gained in recent days as investors dial back expectations for drug pricing regulations under a GOP-led Congress and Trump White House. The broader health care sector has gained 4.5% this month, but remains down 2.4% so far in 2016.


Today's trading volume was above the average of 986 million as more than 1.1 billion shares changed hands at the NYSE floor.


Today's economic data included Retail Sales for October, Import/Export Prices for October, Empire Manufacturing for November, and Business Inventories for September:


Retail sales increased 0.8% in October ( consensus +0.6%) on top of an upwardly revised 1.0% increase (from +0.6%) for September.

Excluding autos, retail sales also jumped 0.8% ( consensus +0.5%) on top of an upwardly revised 0.7% increase (from +0.5%) for September.

Import prices increased 0.5% in October, but were down 0.1% excluding fuel. Export prices increased 0.2% in October and they were also up 0.2%, excluding agriculture.

October marked the seventh time in the last eight months that import prices have risen. Export price have risen in six of the past seven months.

The Empire Manufacturing Survey for November checked in at 1.5 ( consensus -0.5) versus -6.8 in October.

Total business inventories increased 0.1% in September ( consensus +0.2%) after increasing 0.2% in August.

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


Tomorrow's economic data will include the 7:00 ET release of the weekly MBA Mortgage Index and the 8:30 ET release of October PPI ( consensus +0.3%). Meanwhile, October Industrial Production ( consensus +0.2%) and Capacity Utilization ( consensus 75.5%) will cross the wires at 9:15 ET. The day's data will be capped off with the November NAHB Housing Market Index ( consensus 64) and September Net Long-Term TIC Flows, which will be released at 10:00 ET and 16:00 ET, respectively.


Russell 2000: +14.8% YTD

Dow Jones: +8.6% YTD

S&P 500: +6.7% YTD

Nasdaq Composite: +5.4% YTD

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