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Leigh Baldwin & Co.

112 Albany Street, Cazenovia, NY 13035 | Phone: (315) 655-2964 Toll Free: 1-800-659-8044

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Day Traders Diary

1/17/18

 

Stocks rallied to new records on Wednesday with technology shares leading the charge.

The Dow Jones Industrial Average jumped 1.3% to 26115.65, the Nasdaq Composite rose 1.0% to 7298.28, the S&P 500 climbed 0.9% to 2802.56, and the Russell 2000 advanced 0.9% to 1586.66. The Dow, the Nasdaq, and the S&P 500 finished at new record highs, but the Russell 2000 failed to recoup all of its Tuesday decline.

Wednesday's rally was a powerful statement from the bulls, who appeared to be out of gas on Tuesday following a resilient start to the year. Clearly, that wasn't the case. The S&P 500 has advanced in 9 of 11 sessions in 2018, adding 4.8%. The Nasdaq and the Dow have done even better, climbing 5.7% apiece.

Each of the S&P 500's 11 sectors advanced on Wednesday with gains ranging from 0.3% to 1.6%. The technology sector, which is the heaviest group, was the top performer, finishing with a gain of 1.6%. Within the tech group, IBM (IBM 168.65, +4.80) jumped 2.9% after Barclays upgraded IBM shares to 'Overweight,' and Apple (AAPL 179.10, +2.91) climbed 1.7% after announcing that it will make a one-time tax payment of $38 billion to repatriate cash holdings overseas and will invest over $30 billion in the U.S. over the next five years, creating 20,000 new jobs. Apple said its decision was the result of recent changes to the U.S. tax law.

The tech group was also underpinned by chipmakers, which sent the PHLX Semiconductor Index higher by 2.9%. Dow component Intel (INTC 44.39, +1.25) climbed 2.9%.

Right behind technology in the sector standings were the consumer staples and health care groups, which advanced 1.2% and 1.0%, respectively. Meanwhile, the telecom services (+0.3%), consumer discretionary (+0.4%), and industrials (+0.5%) sectors finished at the back of the pack. General Electric (GE 17.35, -0.86) weighed heavily on the industrial group, dropping 4.7%, as investors continued selling in reaction to Tuesday's announcement that GE's reinsurance business will incur a larger-than-expected charge of $6.2 billion.

Meanwhile, the financial sector (+0.8%) finished roughly in line with the broader market following fourth quarter earnings from Bank of America (BAC 31.18, -0.06), Goldman Sachs (GS 253.65,, 4.81), U.S. Bancorp (USB 56.34, -0.83), and Charles Schwab (SCHW 56.09, +0.56). All four companies beat earnings estimates, but Charles Schwab was the only one to advance, adding 1.0%. The three other financial heavyweights lost between 0.2% and 1.9%.

In other corporate news, Ford (F 12.18, -0.92) tumbled 7.0% after announcing that it expects lower operating profits in 2018, and Boeing (BA 351.01, +15.85) jumped 4.7% to a new all-time high after announcing a joint venture with Adient (ADNT 77.08, -4.83) to develop, manufacture, and sell a portfolio of seating products to airlines and aircraft leasing companies. Adient shares finished lower by 5.9%.

In the bond market, U.S. Treasuries sold off in the midweek session, sending yields higher across the curve. The yield on the benchmark 10-yr Treasury note finished at 2.57% after closing Tuesday at 2.54% while the 2-yr yield jumped four basis points to 2.05%.

Elsewhere, the major European bourses finished Wednesday on a lower note, with Germany's DAX (-0.5%) leading the retreat, while equity indices in Asia finished mixed. Japan's Nikkei lost 0.4% while Hong Kong's Hang Seng and China's Shanghai Composite added 0.3% and 0.2%, respectively.

Reviewing Wednesday's economic data, which included Industrial Production and Capacity Utilization for December, the NAHB Housing Market Index for January, the Fed's Beige Book, and the weekly MBA Mortgage Applications Index:

  • Industrial Production increased 0.9% in December (Briefing.com consensus +0.4%), while the November reading was revised to -0.1% (from +0.2%). Capacity Utilization ticked up to 77.9% (Briefing.com consensus 77.3%) from a revised reading of 77.2% in November (from 77.1%).
    • The key takeaway from this report is that Industrial Production in 2017 increased at its fastest annual pace since 2010.
  • The NAHB Housing Market Index for January declined to 72 (Briefing.com consensus 73) from an unrevised reading of 74 in December.
  • The Fed's Beige Book showed that the economy continued to expand in all 12 Federal Reserve Districts from late November through the end of 2017. Most Districts said that wages increased at a modest pace, and a few Districts observed that firms were raising wages in a broader range of industries and positions since the previous report.
  • The weekly MBA Mortgage Applications Index increased 4.1% to follow last week's 8.3% rise.

On Thursday, investors will receive several economic reports, including Housing Starts for December (Briefing.com consensus 1280K), Building Permits for December (Briefing.com consensus 1290K), weekly Initial Claims (Briefing.com consensus 251K), and the Philadelphia Fed Index for January (Briefing.com consensus 24.5). All data will be released at 8:30 AM ET.

  • Nasdaq Composite: +5.7% YTD
  • Dow Jones Industrial Average: +5.7% YTD
  • S&P 500: +4.8% YTD
  • Russell 2000: +3.3% YTD
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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.