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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

1/23/18

 

Stocks climbed to new records for the third session in a row on Tuesday, as investors took in the latest batch of fourth quarter earnings and celebrated the reopening of the federal government.

The Nasdaq Composite jumped 0.7% to 7460.29 (a new record), helped by Netflix (NFLX 250.29, +22.71), which spiked 10.0% after wowing investors with its subscriber growth and first quarter guidance. The S&P 500 rose 0.2% to 2839.13 (a new record), while the Dow Jones Industrial Average finished a tick below its flat line at 26210.81.

In other earnings news, Johnson & Johnson (JNJ 141.83, -6.31) and Procter & Gamble (PG 89.05, -2.84) lost 4.3% and 3.1%, respectively, despite beating earnings estimates and issuing positive guidance, and Verizon (VZ 53.23, -0.23) shed 0.4% after reporting worse-than-expected profits.

Conversely, Travelers (TRV 146.26, +6.91) jumped 5.0% after reporting better-than-expected earnings and revenues.

The federal government reopened its doors following a three-day closure after Congress passed a funding bill on Monday evening. The bill, which President Trump quickly signed into law, will keep the government running through February 8 and was agreed to by Democrats in exchange for Republicans' promise that immigration will be addressed in the near future.

On a separate note, President Trump signed an order to impose tariffs on imported washing machines and solar cells on Tuesday and noted that he is considering additional tariffs on steel and aluminum. The president also said that the sixth round of NAFTA talks, which kicked off on Tuesday, "were going well."

Back on Wall Street, the utilities (+1.0%) and real estate (+1.5%) sectors were the strongest groups on Tuesday, trimming their yearly losses to 4.0% and 2.2%, respectively. The technology (+0.6%) and consumer discretionary (+0.9%) sectors also had strong showings.

Within the consumer discretionary space, Amazon (AMZN 1362.54, +35.23) rallied another 2.7% to finish at a new record for the second day in a row.

On the flip side, the telecom services (-1.2%), health care (-0.5%), and consumer staples (-0.3%) sectors were the weakest performers. Their disappointing showings were fueled by post-earnings losses from Verizon, Johnson & Johnson, and Procter & Gamble (as mentioned above).

In the bond market, U.S. Treasuries rallied on Tuesday, sending yields lower across the curve. The yield on the benchmark 10-yr Treasury note tumbled four basis points to 2.62%, while the 2-yr yield slipped two basis points to 2.05%.

Elsewhere, the major European bourses settled mixed; Germany's DAX was strong, jumping 0.7% to a new record high, while the UK's FTSE added 0.2% and France's CAC shed 0.1%. All eyes were on Davos, Switzerland, where global leaders kicked off the World Economic Forum. President Trump is expected to speak in Davos on Friday.

In Asia, equity indices posted solid gains on Tuesday, with Hong Kong's Hang Seng (+1.5%) and India's Sensex (+1.0%) touching new records. The Bank of Japan voted 8-1 to leave its policy rate at -0.1% and to continue its yield curve control policy so that long-term rates remain around 0.0%.

As for economic data, investors did not receive any on Tuesday, but they will receive several reports on Wednesday, including the weekly MBA Mortgage Applications Index at 7:00 AM ET, the FHFA Housing Price Index for November (Briefing.com consensus +0.4%) at 9:00 AM ET, and Existing Home Sales for December (Briefing.com consensus 5.70 million) at 10:00 AM ET.

  • Nasdaq Composite: +8.1% YTD
  • S&P 500: +6.2% YTD
  • Dow Jones Industrial Average: +6.0% YTD
  • Russell 2000: +4.9% YTD

 

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