Day Traders Diary

7/19/17

 The Nasdaq (+0.6%) kept on rolling in the midweek session, cruising to its ninth-consecutive victory--which marks its longest winning streak in two years--and a new all-time high. The S&P 500 (+0.5%), the Dow (+0.3%), and the Russell 2000 (+1.0%) also notched new record closes, finishing at their best marks of the day.

Today's win was a team effort with all 11 of the S&P 500's sectors finishing in positive territory. The industrial sector (+0.2%) was the weakest performer while the energy group (+1.4%) was the strongest.

The energy space was underpinned by a positive performance from crude oil, which climbed 1.5% to $47.31/bbl on the heels of a better than expected EIA inventory report. According to the Department of Energy, U.S. crude stockpiles declined by 4.7 million barrels last week while the consensus expected a draw of just 3.5 million barrels.

Elsewhere, the influential health care sector (+0.8%) exhibited strength throughout the session with Vertex Pharmaceuticals (VRTX 159.69, +27.53) leading the charge. VRTX shares spiked 20.8% to a fresh all-time high after the biotech company announced positive clinical trial results for three of its newest Cystic-Fibrosis drugs. Unsurprisingly, the iShares Nasdaq Biotechnology ETF (IBB 319.63, +4.49) finished comfortably ahead of the broader market, climbing 1.4%.

The top-weighted technology sector (+0.6%) advanced for the ninth session in a row, but struggled to keep ahead of the broader market. IBM (IBM 147.53, -6.47) weighed on the group, dropping 4.2%, after reporting a decline in revenue for the 21st quarter in a row. Meanwhile, chipmakers finished modestly ahead of the benchmark index, evidenced by the 0.9% increase in the PHLX Semiconductor Index.

As for the laggards, financials struggled to stay afloat despite relatively upbeat earnings reports from Morgan Stanley (MS 46.62, +1.48) and US Bancorp (USB 52.08, +0.45). MS shares jumped 3.3% after the company reported better than expected earnings and revenues while USB shares added 0.9% after the company beat bottom-line estimates. Still, no matter how small the margin of victory, the financial group (+0.2%) managed to put an end to its three-session losing streak.

Like financials, the industrial group finished at the back of the pack. Transports weighed, sending the Dow Jones Transportation Average lower by 0.6%, with CSX (CSX 51.87, -2.77) and United Continental (UAL 74.24, -4.66) pacing the retreat. Both companies beat earnings per share estimates, with CSX also reporting better than expected revenues, but slipped on relatively unimpressive third-quarter guidance. CSX shares dropped 5.1% while UAL shares slipped a bit further, losing 5.9%.

In the bond market, U.S. sovereign debt finished relatively flat as participants hesitated to alter their positioning ahead of policy statements from two major central banks--the Bank of Japan and the European Central Bank. The BoJ will release its policy decision overnight while the ECB will release its decision tomorrow morning. The benchmark 10-yr yield climbed one basis point to 2.27%.

Reviewing Wednesday's economic data, which was limited to June Housing Starts and the weekly MBA Mortgage Applications Index:

Housing starts increased to a seasonally adjusted annualized rate of 1.215 million units in June (Briefing.com consensus 1.160 million), up from a revised 1.122 million units in May (from 1.092 million). Building permits increased to a seasonally adjusted 1.254 million in June (Briefing.com consensus 1.196 million), up from an unrevised 1.168 million in May.

The key takeaway from the report is that there was solid growth in both single-family starts (+6.3%) and permits for single-family homes (+4.1%), both of which are important given the supply constraints in the housing market that have crimped affordability for many prospective home buyers.

The weekly MBA Mortgage Applications Index rose 6.3% to follow last week's 7.4% decrease.

On Thursday, investors will receive several economic reports, including the July Philadelphia Fed Index (Briefing.com consensus 22.0) at 8:30 ET, the weekly Initial Claims Report (Briefing.com consensus 245K) also at 8:30 ET, and the June Leading Indicators Index (Briefing.com consensus 0.4%) at 10:00 ET.

Nasdaq Composite +18.6% YTD

S&P 500 +10.5% YTD

Dow Jones Industrial Average +9.5% YTD

Russell 2000 +6.2% YTD