Day Traders Diary


Stocks ticked higher for the third session in a row on Tuesday as investors digested another round of earnings. The Dow (+0.2%) traded above the 23,000 mark for the first time in history and eventually settled at a new all-time high. The S&P 500 (+0.1%) also eked out a new record close, while the Nasdaq (unch) came up just short, finishing a tick beneath its unchanged mark.

Health care stocks rallied on Tuesday, led by Dow component UnitedHealth (UNH 203.89, +10.69), which surged 5.5% after reporting better-than-expected earnings and raising its earnings guidance slightly. The advance marked the company's largest one-day price gain since it went public 33 years ago and left UNH shares at a new all-time high. 

UnitedHealth is one of the priciest--and therefore one of the most influential--components within the price-weighted Dow and had much to do with the industrial average's relatively positive Tuesday performance. Fellow health care heavyweight and Dow component Johnson & Johnson (JNJ 140.79, +4.67) also underpinned the blue-chip average, adding 3.4% on above-consensus earnings and revenues.

Naturally, the S&P 500's health care sector (+1.3%) finished at the top of the day's sector standings, followed from a distance by the utilities (+0.6%), telecom services (+0.2%), and energy (+0.1%) groups. Most of the seven remaining sectors finished in negative territory, but losses were pretty modest. For instance, the financial sector was the weakest group with a loss of 0.6%.

Financial heavyweights Goldman Sachs (GS 236.09, -6.32) and Morgan Stanley (MS 49.12, +0.18) delivered impressive earnings reports on Tuesday, with both companies surpassing top and bottom line estimates, but Goldman dropped 2.6% nonetheless. Morgan Stanley added more than 2.0% in the opening minutes, but eventually trimmed that gain to 0.4% by the closing bell.

Meanwhile, Netflix (NFLX 199.48, -3.20) retreated from record highs after reporting below-consensus earnings on Monday evening. However, the on-demand entertainment provider did add nearly a million more subscribers than expected in the third quarter. NFLX shares ended Tuesday lower by 1.6%.

U.S. Treasuries settled mostly higher on Tuesday, with longer-dated issues exhibiting relative strength. The yield on the benchmark 10-yr Treasury note dropped one basis point to 2.30% while the 2-yr yield finished unchanged at 1.54%. Meanwhile, the U.S. Dollar Index climbed 0.4% to 93.37--closing at a one-week high.

Reviewing Tuesday's batch of economic data, which included September Industrial Production and Capacity Utilization, September Import/Export Prices, and the October NAHB Housing Market Index:

  • Industrial Production increased 0.3% in September ( consensus +0.2%), while the August reading was revised to -0.7% (from -0.9%). Capacity Utilization rose to 76.0% ( consensus 76.1%) from a revised reading of 75.8% in August (from 76.1%).
    • The key takeaway from the report is that total production in September was held down by the continued effects of Hurricane Harvey and, to a lesser extent, the effects of Hurricane Irma, which combined lowered industrial production growth by 1/4 percentage point.
  • Import prices excluding oil rose 0.3% in September after increasing 0.3% in August. Export prices excluding agriculture increased 1.0% in September after rising a revised 0.8% in August (from 0.7%).
    • The key takeaway is that these price trends will validate the prevailing belief that the Federal Reserve is likely to raise the fed funds rate at its December meeting.
  • The NAHB Housing Market Index for October rose to 68 ( consensus 64) from an unrevised reading of 64 in September.

On Wednesday, investors will receive just two pieces of economic data--the weekly MBA Mortgage Applications Index and September Housing Starts ( consensus 1160K). The two reports will cross the wires at 7:00 ET and 8:30 ET, respectively.

As for earnings, Abbott Labs (ABT 55.06, +0.43) and U.S. Bancorp (USB 53.88, -0.38) are the most notable names on Wednesday morning's docket.

  • Nasdaq Composite +23.0% YTD
  • Dow Jones Industrial Average +16.4% YTD
  • S&P 500 +14.3% YTD
  • Russell 2000 +10.3% YTD

All comments contained herein are for informational purposes only, and should not be considered as a solicitation to buy or sell any security. The firm does not guarantee the accuracy or completeness of the information or make any warranties regarding results from it's usage.