Day Traders Diary
The U.S. equity market kicked off the week with a solid bounce-back performance that reclaimed all of last week's decline and sent the S&P 500 (+1.1%) to a new all-time high. Investors happily dialed back their estimates for damages related to Hurricane Irma--which was downgraded to a tropical storm on Monday morning--and cheered a show of restraint from North Korea. The Nasdaq (+1.1%), the Dow (+1.2%), and the small-cap Russell 2000 (+1.1%) settled roughly in line with the benchmark index.
Irma made landfall in the Florida Keys on Sunday morning as a Category 4 hurricane, but the once historically powerful storm quickly petered out, falling to a Category 2 storm by the mid-afternoon. Millions of Florida residents are still without power and Jacksonville--Florida's most populous city--is experiencing substantial flooding, but the storm ultimately did far less damage than forecasts were predicting.
The prospect of fewer-than-expected hurricane related claims underpinned insurers like Travelers (TRV 122.56, +2.80) on Monday, helping the heavily-weighted financial sector (+1.7%) finish at the top of the sector standings. Meanwhile, home-improvement retailers like Home Depot (HD 158.37, -1.29) struggled, leaving the consumer discretionary sector (+0.5%) near the bottom of the sector standings, as investors curtailed their expectations for home-repair demand.
A tempering of geopolitical concerns related to North Korea also fed into Monday's bullish bias after the hermit nation proved analysts wrong over the weekend, deciding to celebrate the 69th anniversary of its founding without another long-range missile launch. The tranquility may prove to be short-lived, however, as the U.N. is expected to vote on further sanctions against Pyongyang on Monday evening.
Each of the eleven sectors settled Monday's session in the green, but gains varied pretty widely. In addition to financials, the technology (+1.5%) and materials (+1.4%) sectors outperformed. Within the tech group, Apple (AAPL 161.50, +2.87) showed relative strength, climbing 1.8%, ahead of Tuesday's product event, in which the company is expected to unveil its latest iPhone lineup, including the high-end iPhone X--which is reportedly the much-anticipated tenth anniversary edition that's been generating buzz for months.
Chipmakers also had a solid showing on Monday, sending the PHLX Semiconductor Index higher by 2.0% and into positive territory for the month (+0.1%).
Most other sectors finished with gains between 0.7% and 1.0%, but the lightly-weighted telecom services space underperformed, climbing higher by just 0.4%. Following today's relatively disappointing performance, the telecom services space now holds a month-to-date loss of 4.1% and trades at the very bottom of the 2017 sector standings with a year-to-date loss of 14.9%. The energy sector is the only other space trading in the red for the year (-14.1%).
Biotechnology stocks also struggled on Monday, evidenced by the iShares Nasdaq Biotechnology ETF (IBB 334.41, +0.31), which settled just a tick above its flat line. However, the influential health care sector, which houses biotech names, held up relatively well (+0.8%), extending its month-to-date gain to 2.3%.
In the bond market, U.S. Treasuries sold off across the curve, pushing yields above the multi-month lows that they hit last week. The benchmark 10-yr climbed six basis points to 2.12% after falling to its lowest level since November on Thursday.
Meanwhile, U.S. dollar climbed 1.5% against the Japanese yen (109.47), which is considered a safe-haven asset, and the CBOE Volatility Index (VIX 10.81, -1.31) tumbled 10.8%.
Investors didn't receive any economic data on Monday. Tuesday's lone economic report--the Job Openings and Labor Turnover Survey (JOLTS) for July--will be released at 10:00 ET.