Day Traders Diary



The week's bullish momentum petered out on Wednesday, but, thanks to a late-afternoon rally, the S&P 500 (+0.1%), the Nasdaq (+0.1%), and the Dow (+0.2%) still managed to register new record-high closes. The major averages hovered near their flat lines throughout Wednesday's session as investors lacked conviction amid a shortage of market-moving catalysts. 

Traders kept an eye on Apple (AAPL 159.65, -1.21) throughout the midweek session, looking to see how the tech giant would respond to yesterday's product event--in which the company unveiled a trio of iPhones, including the much-anticipated iPhone X. AAPL shares were weak throughout the session and eventually ended the day with a sizable loss of 0.8%.

The company's Wednesday decline, which was preceded by a 0.4% drop on Tuesday, was attributed by some to the iPhone X's later-than-expected release date (November 3), but profit taking on the heels of a major event was also a likely contributing factor considering Apple has made a massive run this year (+37.8% YTD).

Nonetheless, the broader market held up relatively well as investors rotated into some of the sectors that have struggled so far this year--including the energy sector, which settled at the top of the day's leaderboard (+1.2%). The energy space benefited from a rally within the crude oil futures market that sent the price of WTI crude to $49.30/bbl, a one-day increase of 2.2%.

The commodity was underpinned by the International Energy Agency's prediction that global oil demand is set to accelerate at its fastest pace in two years and the weekly EIA inventory report, which showed a much greater-than-expected decline in gasoline inventories (8.4 million actual vs 2.1 million consensus)--a positive sign for future crude demand.

However, it's important to note that hurricane-related factors were also at play in this week's EIA inventory report, which also showed a larger than expected build of crude stockpiles (5.9 million barrels actual vs 3.2 million consensus).

Like energy, the telecom services sector bucked its bearish year-to-date trend, climbing higher by 0.8%, to finish roughly in line with the consumer discretionary space (+0.7%) near the top of the leaderboard. Retailers helped underpin the consumer discretionary group's positive performance, evidenced by the SPDR S&P Retail ETF (XRT 41.38, +0.43), which advanced 1.1%.

Within the retail space, Nordstrom (JWN 47.74, +2.69) showed notable strength, jumping 6.0%, following reports that the company is nearing a deal with private equity firm Leonard Green that would help the high-end retailer go private. Target (TGT 59.51, +1.62) also outperformed, adding 2.8%, after announcing plans to hire around 100,000 employees for the upcoming holiday season.

The heavily-weighted financial sector (+0.2%) also finished in the green, marking its third-straight victory, as did the consumer staples group (+0.1%). On the flip side, six groups finished in the red--industrials (-0.1%), materials (unch), technology (-0.2%), health care (-0.4%), utilities (-0.5%), and real estate (-0.4%)--but losses were modest for the most part.

In the bond market, Treasuries slipped once again, sending yields higher for the third session in a row. The benchmark 10-yr yield climbed three basis points to 2.20%, which marks its best level of the month. Meanwhile, the U.S. Dollar Index (92.42, +0.53) jumped 0.6% to register its third-consecutive advance.

Reviewing Wednesday's economic data, which was limited to the Producer Price Index for August, the Treasury Budget for August, and the weekly MBA Mortgage Applications Index:

  • Producer prices rose 0.2% in August, while the consensus expected an increase of 0.3%. Meanwhile, core producer prices rose 0.1%, which is below the 0.2% increase that the consensus expected. Year-over-year, core producer prices are up 2.0%.
    • The key takeaway from the report is that producer prices picked up in August without any full-scale impact from Hurricane Harvey, which will presumably help drive up producer prices in September along with Hurricane Irma. The question, though, is what kind of pass-through effect might there be on consumer prices?
  • The Treasury Budget for August showed a deficit of $107.7 billion versus a deficit of $107.1 billion for August 2016.
    • The Treasury Budget data is not seasonally adjusted, so the August deficit cannot be compared to the $42.9 billion deficit registered in July.
  • The weekly MBA Mortgage Applications Index increased 9.9% to follow last week's 3.3% rise.

On Thursday, investors will receive two pieces of economic data--the Consumer Price Index for August ( consensus +0.3%) and the Weekly Initial Claims Report ( consensus 310K). Both reports will be released at 8:30 ET.

  • Nasdaq Composite +20.0% YTD
  • Dow Jones Industrial Average +12.1% YTD
  • S&P 500 +11.6% YTD
  • Russell 2000 +5.1% YTD

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