Day Traders Diary



Investors have managed to muscle the major averages modestly higher in the first half of Thursday's range-bound session, but conviction is relatively weak with 1.1 listings trading in the red for each advancer. The Nasdaq (+0.2%) and the Dow (+0.2%) trade roughly in line with the benchmark S&P 500, which is higher by 0.2%.

Fed Chair Janet Yellen wrapped up her two-day testimony on Capitol Hill today by answering a slew of questions from the Senate Banking Committee. Unlike yesterday, today's testimony did little to influence the market one way or the other. However, it's worth noting that Ms. Yellen did acknowledge that it is premature to conclude that the underlying inflation trend is falling well short of the Fed's 2.0% target.

Elsewhere on Capitol Hill, Senate Republican leaders released their updated version of a health care reform bill that is aimed at bridging the gap that currently exists between centrist-leaning and more-conservative members of the GOP. One of the most talked about revisions is one suggested by Senator Ted Cruz (R-TX) that would permit insurers to sell plans that don't comply with Obamacare regulations as long as they also sell plans that do.

As for Wall Street, eight of the S&P 500's eleven sectors hover within 0.2% of their unchanged marks. Conversely, the top-weighted technology (+0.7%) and financials (+0.5%) groups are exhibiting relative strength while the lightly-weighted telecom services (-0.6%) space shows relative weakness.

The financial sector's positive performance is particularly notable as it marks the first time this week that the group has managed to trade ahead of the broader market. Banks are trading higher across the board with Dow component Goldman Sachs (GS 229.67, +2.28) leading the advance. GS shares are up 1.1%.

In the bond market, U.S. Treasuries have given back a good chunk of yesterday's rally in a curve-steepening trade. The heaviest selling has taken place at the back end of the curve, leaving the benchmark 10-yr yield higher by four basis points at 2.36%.

Reviewing today's economic data, which has included June PPI and the weekly Initial Claims Report thus far:

  • June producer prices came in at +0.1%, which is above the consensus of -0.1%. Core producer prices rose 0.1% while the consensus expected an increase of 0.2%.
    • The key takeaway from the report is that producer price trends are also seeing some disinflation, which will likely keep the Fed in observation mode, as opposed to action mode, when it comes to the policy rate.
  • The latest weekly initial jobless claims count totaled 247,000 while the consensus expected a reading of 245,000. Today's tally was below the revised prior week count of 250,000 (from 248,000). As for continuing claims, they declined to 1.945 million from the revised count of 1.965 million (from 1.956 million).
    • The key takeaway is that a low level of initial jobless claims reflects a tight labor market.

The last economic report on today's docket--June Treasury Budget--will be released at 14:00 ET.

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