Day Traders Diary

6/12/17

The stock market opened the week with its second-consecutive decline as the top-weighted technology sector (-0.8%) weighed on the broader market. However, as a consolation prize, both the tech sector and the S&P 500 (-0.1%) finished near their best marks of the day. The tech-heavy Nasdaq (-0.5%) underperformed while the Dow (-0.2%) settled just a step behind the benchmark index.

At the beginning of Monday's session, it appeared that Wall Street may duplicate Friday's sector rotation trade; tech stocks opened sharply lower while financials and energy stocks opened distinctly higher. However, the three sectors quickly retraced a portion of their early moves with the financial sector actually entering negative territory within two hours of the opening bell. The financial space (+0.2%) came back a bit in the afternoon, but never returned to its early-morning high.

The technology sector (-0.8%) held a solid loss throughout the session as mega-cap names like Apple (AAPL 145.42, -3.56), Microsoft (MSFT 69.78, -0.54), Alphabet (GOOGL 961.81, -8.31), and Facebook (FB 148.44, -1.16) refused to let up. Apple showed relative weakness, dropping 2.4%, after the company was downgraded to 'Neutral' from 'Buy' at Mizuho early on Monday morning. Chipmakers also weighed on the tech sector, evidenced by the 0.5% decrease in the PHLX Semiconductor Index.

Like financials, the energy sector (+0.7%) never returned to its early-morning high, but, unlike financials, the energy group was able to stay above water throughout the session. Crude oil helped the sector's bullish disposition, climbing 0.5% to $46.06/bbl, but the commodity's performance was somewhat disappointing considering it closed near its session low.

The telecom services (+0.9%) and real estate (+0.6%) sectors were also strong throughout Monday's session, but their positive performances had a pretty modest impact due to their relatively small market caps; the two sectors comprise around 5.0% of the broader market combined.

General Electric (GE 28.94, +1.00) had a notable impact in the industrial sector (+0.5%), jumping 3.6%, after the company announced that Chairman and CEO Jeff Immelt will be retiring from the company. John Flannery, who is the current president and CEO of GE Healthcare, will be replacing Mr. Immelt.

In addition to GE's advance, the industrial space profited from the outperformance of transports, evidenced by the 0.7% increase in the Dow Jones Transportation Average. Logistics heavyweights like UPS (UPS 108.94, +1.91) and FedEx (FDX 209.12, +2.72) showed notable strength, adding 1.8% and 1.3%, respectively.

However, on the flip side, five sectors--consumer discretionary (-0.1%), materials (-0.5%), health care (-0.1%), consumer staples (-0.1%), and utilities (-0.2%)--paired with the technology sector to overpower the five advancers. Amazon (AMZN 964.91, -13.40) weighed heavily on the consumer discretionary group, overriding an otherwise positive performance from most of the group's components.

Still, despite the slip on Wall Street, safe-haven assets like U.S. Treasuries and gold ticked down; gold dropped 0.2% to $1,269.00/ozt while the benchmark 10-yr yield, which moves inversely to the price of the 10-yr Treasury note, climbed one basis point to 2.21%.

However, it is worth pointing out that the CBOE Volatility Index (VIX 11.39, +0.69, +6.5%), sometimes called the 'investor fear gauge', did advance to a fresh three-week high.

Investors did not receive any economic data on Monday. Tomorrow's economic calendar will also be light with just one report--May PPI (Briefing.com consensus 0.0%)--on the docket. The report will be released at 8:30 ET.

Nasdaq Composite +14.7% YTD

S&P 500 +8.5% YTD

Dow Jones Industrial Average +7.5% YTD

Russell 2000 +4.6% YTD