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Leigh Baldwin & Co.

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Day Traders Diary

3/27/17

Last week's health care hiccup fostered some bearish undertones on Monday morning, but investors were largely able to shake off the concerns to start the week unscathed. The Nasdaq settled 0.2% higher while the S&P 500 and the Dow finished with losses of 0.1% and 0.2%, respectively.

 

With health care reform in the rear-view mirror, lawmakers will now turn their attention to a major catalyst in the stock market's post-election rally--tax reform. However, tax reform may prove to be challenging for the GOP as House Republicans appear to be divided on the key issue of a border adjustment tax. For instance, Freedom Caucus Chairman Mark Meadows is opposed to the idea of a penalty at the border while House Ways and Means Committee Chairman Kevin Brady believes it to be "a given" with any tax reform legislation.

 

White House Press Secretary Sean Spicer said that according to Treasury Secretary Steven Mnuchin, a tax reform package is expected in August.

 

At the top of the day's sector standings was the health care space (+0.4%) as the demise of the American Health Care Act puts President Trump's pledge to lower drug prices into question. Biotech names saw relative strength on Monday, evidenced by the 1.1% increase in the iShares Nasdaq Biotechnology ETF (IBB 293.14, +3.08).

 

The technology (+0.1%), materials (+0.3%), and consumer discretionary (unch) groups also settled in positive territory. Large-cap tech names like Apple (AAPL 140.88, +0.24), Microsoft (MSFT 65.10, +0.12), Alphabet (GOOGL 838.51, +3.37), and Intel (INTC 35.39, +0.23) underpinned the top-weighted tech group's outperformance.

 

It's worth noting that today's uptick extends Apple's year-to-date gain to 21.6%. The tech giant has seemingly acted as a safe haven for investors looking for a place to park their money amid the stock market's recent sideways trend.

 

On the flip side, the lightly-weighted real estate (-0.6%) and telecom services (-0.7%) sectors settled at the bottom of the day's leaderboard while the remaining groups--financials, industrials, energy, consumer staples, and utilities--finished with losses between 0.1% and 0.5%.

 

In the Treasury market, U.S. sovereign debt settled in positive territory in a curve-flattening trade. The 10-yr yield (2.37%) finished four basis points lower while the 2-yr yield (1.25%) closed only one basis point below its unchanged mark.

 

Meanwhile, in the currency market, the U.S. Dollar Index (99.03, -0.56) finished lower by 0.6%.

 

Investors did not receive any economic data on Monday. A handful of reports will be released on Tuesday, including February Advanced International Trade in Goods (Briefing.com consensus -$66.1 billion) and Advanced Wholesale Inventories (Briefing.com consensus 0.2%) at 8:30 ET, January S&P Case-Shiller Home Price Index (Briefing.com consensus 5.6%) at 9:00 ET, and March Consumer Confidence (Briefing.com consensus 113.3) at 10:00 ET.

 

Nasdaq Composite +8.5% YTD

S&P 500 +4.6% YTD

Dow Jones Industrial Average +4.0% YTD

Russell 2000 UNCH YTD

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