Day Traders Diary



U.S. stocks jumped to new record highs on Thursday, fueled by increased optimism regarding the feasibility of a tax overhaul. 

The Dow Jones Industrial Average and the S&P 500 both finished at all-time highs, adding 1.4% and 0.8%, respectively, but some afternoon selling left the indices a step below their best marks of the day. Meanwhile, the tech-heavy Nasdaq climbed 0.7%, reclaiming about half of its Wednesday decline.

Small caps underperformed, but still pushed the Russell 2000 (+0.1%) to a fresh record high.

The Senate will likely vote on its version of a tax reform bill either late Thursday night or early Friday morning. The chances of the bill passing seemingly increased after Senator John McCain (R-AZ) came out in favor of the piece of legislation, however, there are still a handful of GOP Senators sitting on the fence and defects from just three would block the bill's passage.

Financials were bullish following Mr. McCain's announcement, but weakened notably in the afternoon. Nonetheless, the S&P 500's financial sector finished with a solid gain of 0.6%, extending its week-to-date advance to 4.9%. In total, 11 of 11 groups finished Thursday in the green, with gains ranging from 0.1% to 1.6%.

Energy was the top-performing sector, adding 1.6%, after OPEC and non-OPEC nations, including Russia, agreed to extend their production cut agreement by another nine months, as expected. The deal, which will now expire at the end of 2018, seeks to reduce output by 1.8 million barrels per day.

Meanwhile, West Texas Intermediate crude futures finished flat at $57.31 per barrel, unable to add anything further to their November rally--which was largely fueled by the expectation that the OPEC/non-OPEC production cut agreement would be extended. WTI crude futures finished November with a monthly gain of 5.4%.

The industrial sector also moved solidly higher on Thursday, climbing 1.5%. Transports paced the industrial advance, evidenced by the Dow Jones Transportation Average, which climbed 2.0% to finish at a new all-time high for the second day in a row. The DJTA has added 6.8% so far this week.

On the corporate front, CVS Health (CVS 76.60, +3.20) jumped 4.4% following a Wall Street Journal report that the pharmacy retailer is close to reaching a long rumored deal to acquire Aetna (AET 180.18, +0.61) for a price somewhere between $200 and $205 per share. AET shares advanced 0.3%.

Kroger (KR 25.86, +1.48) finished with a gain of 6.1%--although it held a gain of more than 10.0% at the opening bell--after the supermarket chain reported better-than-expected earnings for the third quarter and reaffirmed its profit guidance for fiscal year 2018.

In the bond market, U.S. Treasuries moved lower in a curve-steepening trade, pushing the 2yr-10yr spread higher by one basis point. The yield on the benchmark 10-yr Treasury note jumped four basis points to 2.42%, while the 2-yr yield climbed three basis points to 1.79%.

Elsewhere, European equities held gains through much of Thursday's session, but a late bout of selling left the Euro Stoxx 50 lower by 0.4%. The UK's FTSE showed relative weakness for the second day in a row, finishing with a loss of 0.9%. For the week, the FTSE is down 1.1%.

Stock indices in the Asia-Pacific region settled Thursday mostly lower, but Japan's Nikkei managed to advance 0.6%.

Reviewing Thursday's economic data, which included October Personal Income, October Personal Spending, October PCE Prices, weekly Initial Claims, and the Chicago PMI for November:

  • Personal income climbed 0.4% in October ( consensus +0.3%) following an unrevised increase of 0.4% in September. Meanwhile, personal spending rose 0.3% in October ( consensus +0.3%), down from a revised increase of 0.9% in September (from 1.0%). The PCE Price Index increased 0.1% in October ( consensus +0.1%), while the core PCE Price Index, which excludes food and energy, increased 0.2% ( consensus +0.2%). Year-over-year, the core PCE Price Index is up 1.4%.
    • The key takeaway from the report is that it points to the prospect of improved consumer spending and the persistence of low inflation.
  • The latest weekly initial jobless claims count totaled 238,000, which is in line with the consensus. Today's tally was below the revised prior week count of 240,000 (from 239,000). As for continuing claims, they increased to 1.957 million from a revised count of 1.915 million (from 1.904 million).
    • The key takeaway from the report is the low initial claims reading, which underscores a reluctance on the part of employers to let workers go in a tight labor market.
  • Chicago PMI for November hit 63.9 ( consensus 63.0), down from 66.2 in October.
    • The key takeaway from the report is that three-in-four firms responding to a special question said another hike in the fed funds rate will have no material impact on their business.

On Friday, investors will receive the ISM Manufacturing Index for November ( consensus 58.3) and the Construction Spending Report for October ( consensus +0.5%); both reports will be released at 10:00 ET. In addition, November auto and truck sales will be released throughout the day.

  • Nasdaq Composite +27.7% YTD
  • Dow Jones Industrial Average +22.8% YTD
  • S&P 500 +18.3% YTD
  • Russell 2000 +13.8% 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.