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Leigh Baldwin & Co.

112 Albany Street, Cazenovia, NY 13035 | Phone: (315) 655-2964 Toll Free: 1-800-659-8044

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Day Traders Diary

8/30/17

 
 

The S&P 500 (+0.3%) is modestly higher this afternoon, wrestling with its 50-day simple moving average (2,450.96), while the Dow (unch) lags and the Nasdaq (+0.7%) outperforms. Both the S&P 500 and the Nasdaq are currently hovering near their best marks of the day. Trading volume remains light, as it has for the majority of the month.

This morning's batch of economic data turned out to be a pleasant surprise as both the ADP Employment Change Report for August and the second estimate of second quarter GDP beat came in better than expected. The ADP Report showed an increase of 237,000 in August (Briefing.com consensus 180,000) while the July reading was revised higher to 201,000 from 178,000.

Meanwhile, the second estimate of second quarter GDP pointed to an expansion of 3.0%, while the Briefing.com consensus expected a reading of 2.7%. The first estimate came in at 2.6% last month.

Despite the upbeat readings, Treasury yields have slipped from their session highs since the reports were released. The 2-yr yield is up two basis points at 1.33%, but traded as high as 1.35% early this morning. Meanwhile, the benchmark 10-yr yield is flat at 2.13% after holding a modest gain.

Similarly, the U.S. Dollar Index (92.67, +0.40) hovers a step below its session high (92.80), but is still trading in positive territory, up 0.5%. The greenback has climbed 0.5% against both the euro (1.1913) and the yen (110.23).

In the equity market, eight of the eleven sectors are currently trading in the green. The financials (+0.5%), consumer discretionary (+0.6%), materials (+0.6%), technology (+0.5%), and health care (+0.4%) groups all exhibit relative strength. 

Both biotechnology and semiconductor stocks have rallied today, helping the tech-heavy Nasdaq keep ahead of the broader market. The iShares Nasdaq Biotechnology ETF (IBB 323.14, +5.32) has advanced 1.7% to a one-month high with Incyte (INCY 135.23, +10.23) and Gilead Sciences (GILD 79.58, +3.84) leading the charge, jumping 8.1% and 5.0%, respectively.

Meanwhile, chipmakers have sent the PHLX Semiconductor Index higher by 1.1%. Analog Devices (ADI 82.50, +2.94) shows notable strength, climbing 3.7%, after beating both top and bottom line estimates and issuing above-consensus guidance. Today's advance leaves ADI shares near a three-month high.

On the flip side, the consumer staples (-0.1%), utilities (-0.3%), and telecom services (-0.4%) spaces are trading in the red. The underperformance of these three groups points to an underlying risk-on tone in the equity market as all three are countercyclical in nature and tend to lag when investor sentiment is trending higher.

Reviewing Wednesday's economic data, which included the ADP Employment Change Report for August, the second estimate of second quarter GDP, and the weekly MBA Mortgage Applications Index:

  • The ADP National Employment Report showed an increase of 237,000 in August (Briefing.com consensus 180,000) while the July reading was revised higher to 201,000 from 178,000.
  • The second estimate of second quarter GDP pointed to an expansion of 3.0%, while the Briefing.com consensus expected a reading of 2.7%. The first estimate came in at 2.6% last month.
    • The key takeaway from the report is that it was driven by a pickup in both consumer and business spending, which is typically a good mix for accelerating economic growth.
  • The weekly MBA Mortgage Applications Index dropped 2.3% to follow last week's 0.5% decrease.
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