Day Traders Diary
U.S. equities tumbled for the second day in a row on Tuesday, with health care and energy shares leading the retreat, as investors took another round of profits following solid gains over the first four weeks of 2018--the S&P 500's best start to a year since 1987.
The Dow Jones Industrial Average tumbled 1.4% to 26076.89, the S&P 500 dropped 1.1% to 2822.43, and the Nasdaq Composite declined 0.9% to 7402.48. The three indices opened Tuesday solidly lower and kept within a pretty narrow range throughout the session. Adding in Monday's decline, the S&P 500 is down 1.8% for the week, while the Dow and the Nasdaq hold week-to-date losses of 2.0% and 1.4%, respectively.
10 of 11 sectors finished Tuesday in the red. The heavily-weighted health care group showed particular weakness, losing 2.1%, after Amazon (AMZN 1437.82, +20.14), Berkshire Hathaway (BRK.A 323000, -499), and JPMorgan Chase (JPM 115.11, -1.09) announced that they're forming a company focused on reducing health care costs for their U.S. employees. Health care providers like UnitedHealth (UNH 236.65, -10.76), Anthem (ANTM 243.44, -13.58), and Cigna (CI 207.89, -16.01) lost between 4.4% and 7.2% in reaction to the announcement.
Meanwhile, drug maker Pfizer (PFE 37.80, -1.22) and health care provider Aenta (AET 187.89, -5.85) lost 3.1% and 3.0%, respectively, despite reporting better-than-expected earnings for the fourth quarter. Pfizer also issued upbeat guidance for fiscal year 2018.
Like health care, the energy sector was especially weak, losing 2.0%, as the price of crude oil declined for the second consecutive session; West Texas Intermediate crude futures dropped 1.6% to $64.54 per barrel and now sit about 2.5% below the three-year high they touched last Friday.
On a positive note, the consumer discretionary sector (-0.5%) performed relatively well, even though McDonald's (MCD 172.48, -5.29) tumbled 3.0% after beating Q4 earnings and revenue estimates, and Harley-Davidson (HOG 50.84, -4.45) dropped 8.1% after a disappointing fourth quarter and downbeat motorcycle shipment guidance for fiscal year 2018. Amazon (AMZN 1437.82, +20.14), which climbed 1.4% to a new all-time high, helped keep the sector's loss in check.
The lightly-weighted utilities sector (+0.2%) was the lone advancer, but the telecom services sector (unch) finished not far behind.
In the bond market, U.S. Treasuries ended Tuesday mostly lower, with longer-dated issues showing particular weakness. The yield on the benchmark 10-yr Treasury note climbed three basis points to 2.73%, while the 2-yr yield finished unchanged at 2.12%. Yields move inversely to prices.
Elsewhere, equity indies in the Asia-Pacific region settled lower, with Japan's Nikkei (-1.4%) leading the retreat, while the Euro Stoxx 50 lost 0.9%. The U.S. dollar lost 0.1% against the euro (1.2396), 0.5% against the British pound (1.4144), and 0.1% against the Japanese yen (108.82).
At 9:00 PM ET, President Trump will deliver his first State of the Union address. The president is expected to look both forwards--by pushing for a bipartisan deal in Congress on immigration and infrastructure spending--and backwards--by touting the GOP's victory on tax reform.
Reviewing Tuesday's economic data, which included the Consumer Confidence Index for January and the S&P Case-Shiller Home Price Index for November:
On Wednesday, investors will receive the weekly MBA Mortgage Applications Index at 7:00 AM ET, the ADP Employment Change report for January (Briefing.com consensus 190K) at 8:15 AM ET, the Employment Cost Index for the fourth quarter at 8:30 AM ET, the Chicago PMI for January (Briefing.com consensus 61) at 9:45 AM ET, and Pending Homes Sales for December (Briefing.com consensus +0.6%) at 10:00 AM ET.
In addition, the Fed's latest policy directive will be released at 2:00 PM ET.
- Headlines provided by Briefing.com