Day Traders Diary



The stock market enjoyed its fourth consecutive day of gains with the S&P 500 rising 1.3% to a fresh record high. The benchmark index settled ahead of the Nasdaq Composite (+1.1%), which lagged since the start.

Equity indices started the day near their flat lines, which masked gains in just about every sector. In turn, those early gains were masked by the underperfomance of the health care space (-0.8%), which was down more than 2.0% at the start.

The initial weakness in health care developed after President-elect Donald Trump told TIME Magazine that he wants to lower drug prices. This sent the iShares Nasdaq Biotechnology ETF (IBB 266.28, -8.06) lower by 2.9%. Recall that the Clinton campaign took aim at high drug prices, which contributed to an 11.3% October dive in the biotech ETF. With today's retreat, the ETF is back near the middle of its range from October.

The opening slide in biotechnology placed the Nasdaq below its flat line, but the index recovered as biotechnology climbed off its low and the top-weighted technology sector (+1.9%) surged into third place on the sector leaderboard. High-beta chipmakers had an even better showing than the sector as the PHLX Semiconductor Index jumped 2.2%. Micron (MU 20.45, +1.39) was a standout, soaring 7.3%, after Western Digital (WDC 69.15, +5.30), who acquired Micron's competitor SanDisk, raised its guidance, citing a favorable market environment. Seagate (STX 40.27, +1.12) climbed 2.9% following Western Digital's guidance, but it is worth noting that Western Digital sells consumer solid-state drives after the acquisition of SanDisk while Seagate remains focused on the mechanical hard drive market.

Similar to technology, four of the remaining five cyclical sectors posted gains while energy (+0.7%) lagged, but still ended in the green even though crude oil fell 2.3% to $49.77/bbl. The energy component slumped into the close after the government's inventory report confirmed last night's bearish reading from the American Petroleum Institute. In addition to showing an inventory build, today's EIA report revealed large increases in gasoline and distillate inventories.

Two countercyclical sectors—telecom services (+2.4%) and real estate (+2.2%)—settled atop the leaderboard thanks to daylong demand for Treasuries, which resulted in a five-basis point downtick in the 10-yr yield (2.34%).

The U.S. Dollar Index (100.18, -0.31) shed 0.3%, returning to its Monday low. The euro gained 0.4%, climbing to 1.0764 against the greenback ahead of tomorrow's policy announcement from the European Central Bank. Judging by the action in European and U.S. equities leading up to the meeting, participants are not worried about ECB President Mario Draghi hinting at reducing asset purchases. Instead, the market is positioned for the central bank to extend or maintain its current purchase program, which is set to end early next year.

Today's participation was above average as more than a billion shares changed hands at the NYSE floor.

Economic data included JOLTS, Consumer Credit, and MBA Mortgage Index:

  • The October Job Openings and Labor Turnover Survey showed that job openings decreased to 5.534 million from a revised 5.631 million (from 5.486 million) in September
  • The Consumer Credit report for October showed an increase of $16.0 billion while the consensus expected growth of $18.7 billion
    • September credit growth was revised up to $21.8 billion from $19.3 billion
  • The weekly MBA Mortgage Index declined 0.7% after falling 9.4% one week ago

Tomorrow's economic data will be limited to weekly initial claims ( consensus 255K), which will be released at 8:30 ET.

  • Russell 2000 +20.6% YTD
  • Dow Jones Industrial Average +12.2% YTD
  • S&P 500 +9.7% YTD
  • Nasdaq Composite +7.7% YTD

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