Day Traders Diary



Equities finished mixed on Tuesday as the broader market largely ignored a modest bounce-back performance from the technology sector (+0.4%)--which moved sharply lower on Monday. The tech-heavy Nasdaq climbed 0.2%, the S&P 500 finished just a tick above its flat line, and the Dow slipped 0.1%.The Russell 2000 (+0.3%) settled at a fresh record high for the third session in a row.

The technology sector never touched negative territory on Tuesday, but the magnitude of its gain did fluctuate a bit, hovering between 0.01% and 0.84%. However, the sector's top component by market cap--Apple (AAPL 153.14, +2.59)--remained strong throughout the session, determined to end its four-session losing streak. AAPL shares settled higher by 1.7%.

Meanwhile, NVIDIA (NVDA 171.96, +0.96) was strong early following news that it will provide GPU hardware to several Chinese tech giants, but weakened throughout the day. The chipmaker hit a new session low in the late afternoon following a report that Tesla (TSLA 345.25, +0.26) will use Intel (INTC 37.47, +0.31) technology for infotainment instead of NVIDIA.

Still, NVIDIA managed to contribute to the technology rally, settling higher by 0.6%. Red Hat (RHT 110.07, +4.31) also contributed (+4.1%), jumping to its best level in nearly two decades, after beating both top and bottom line estimates and issuing upbeat guidance.

Outside of the tech sector, Darden Restaurants (DRI 77.71, -5.43), the owner of brands like Olive Garden and LongHorn Steakhouse, dropped 6.5% despite reporting in-line earnings and revenues. Conversely, Carnival (CCL 65.32, +1.82) climbed 2.9% after reporting better-than-expected top and bottom lines.

The S&P 500's consumer discretionary sector, which houses both Darden Restaurants and Carnival, finished slightly behind the broader market, ticking down 0.1%. In general, sector movement was pretty modest as eight of the eleven groups settled within 0.2% of their unchanged marks.

Fed Chair Janet Yellen spoke at a NABE meeting in Cleveland on Tuesday, defending a gradual path of rate hikes despite continued uncertainty in the area of inflation. Her comments did not move either the stock market or the Treasury market, which declined modestly, sending yields slightly higher.

The yield on the benchmark 10-yr Treasury note climbed one basis point to 2.23% while the 2-yr yield jumped two basis points to 1.44%.

In Washington, Senator Bill Cassidy (R-LA) confirmed that the Senate will not vote on the Cassidy-Graham health care bill as the piece of legislation failed to gain enough support within the GOP. Lawmakers will table the health care reform effort for now and return their attention to tax reform.

Reviewing Tuesday's economic data, which included August New Home Sales, the Conference Board's Consumer Confidence Index for September, and the Case-Shiller 20-City Composite Home Price Index for July:

  • New Home Sales in August hit an annualized rate of 560,000, which is below the revised July rate of 580,000 (from 571,000), and lower than the consensus of 577,000.
    • The key takeaway from the report isn't that sales declined 4.7% in the South, which was partly impacted by Hurricane Harvey, but that sales declined 2.7% in the West, which wasn't impacted by Hurricane Harvey, after declining 15.3% in July. The weakness in the West could be a function of constraints related to high prices, yet it will need to be watched closely as a potential harbinger of a broader slowdown in the housing market related to affordability constraints.
  • The consumer confidence reading for September declined to 119.8 from the prior month's revised reading of 120.4 (from 122.9). The consensus expected the survey to hit 119.4.
    • The key takeaway from the report is that the downturn was driven mostly by changing attitudes among consumers in the hurricane-ravaged states of Texas and Florida, which manifested themselves in the Present Situation Index. Overall, consumers remained relatively upbeat about the short-term outlook.
  • The July Case-Shiller 20-city Index hit 5.8%, which is in line with the consensus. The prior month's reading was revised to 5.6% from 5.7%.

On Wednesday, investors will receive several economic reports, including the weekly MBA Mortgage Applications Index at 7:00 ET, August Durable Goods Orders ( consensus +0.7%) at 8:30 ET, and August Pending Home Sales ( consensus -0.4%) at 10:00 ET.

  • Nasdaq Composite +18.5% YTD
  • Dow Jones Industrial Average +12.8% YTD
  • S&P 500 +11.5% YTD
  • Russell 2000 +7.4% YTD

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