Day Traders Diary
The major averages have been extending their opening losses throughout the first half of Thursday's session with the S&P 500's most influential sectors--technology (-1.6%) and financials (-1.1%)--pacing the retreat. The tech-laden Nasdaq is the weakest index, dropping 1.5%, followed by the S&P 500 (-0.9%), and then the Dow (-0.6%).
Tensions between North Korea and the U.S. continue to run high after Pyongyang laid out the details of a plan to strike the U.S. territory of Guam by mid-August. The heightened geopolitical uncertainty may have gotten the bearish ball rolling today, but the follow through points to a market that many believed was already overdue for a pullback.
The signs have been there for a little while as both the Dow Jones Transportation Average and the Russell 2000, which are seen as leading indicators, have been underperforming, Treasuries have been rallying, and a strong earnings reporting period has been met with a largely muted response from investors.
Still, today's slide is pretty modest in the grand scheme of things as the benchmark S&P 500 remains 9.3% higher for the year. Even more impressive, the Nasdaq and the Dow hold year-to-date gains of 15.9% and 10.8%, respectively. Both the S&P 500 and the Dow hit all-time highs on Monday while its been just a little over a week since the Nasdaq closed at a record high.
Ten of eleven sectors currently trade in negative territory with the lightly-weighted utilities group (+0.2%) being the lone advancer. As mentioned in the opening line, the top-weighted technology (-1.6%) and financials (-1.1%) sectors exhibit relative weakness. The consumer discretionary sector (-1.1%) is also struggling to keep pace with the broader market as retailers weigh.
The SPDR S&P 500 Retail ETF (XRT 39.50, -1.14) has dropped 2.8% in today's session with Kohl's (KSS 38.95, -2.98) and Macy's (M 20.77, -2.26) leading the retreat. The two department store retailers have lost 7.1% and 9.7%, respectively, despite reporting better than expected earnings this morning.
Outside of the equity market, safe-haven assets like U.S. Treasuries and gold are trading higher, as is the CBOE Volatility Index (VIX 15.33, +4.22), which has spiked 37.5% to a three-month high. Gold is up 0.9% at $1,290.53/ozt, marking its best level in two months, while the benchmark 10-yr yield has slipped three basis points to 2.22%.
Reviewing Thursday's economic data, which included the July Producer Price Index and the weekly Initial Claims Report: