Day Traders Diary



Stocks tumbled on Wednesday, with the bulk of the losses coming in the final hour of trading. The S&P 500 dropped 1.1%, moving below its 50-day simple moving average (2736) for the first time this week. The Nasdaq Composite (-0.8%) held up slightly better, while the Dow Jones Industrial Average (-1.5%) did slightly worse.

The major averages opened with modest gains, but retreated to their flat lines about an hour into the session. The S&P 500 then dipped into the red, but bounced back after hitting its 50-day simple moving average. However, the benchmark index broke through the key technical level on its second attempt, which further accelerated the selling.

Losses were broad on Wednesday, with 11 of 11 S&P 500 sectors finishing in negative territory.

The energy sector was the weakest group (-2.3%), moving in tandem with the price of crude oil after the Department of Energy's weekly crude oil inventory report showed that U.S. inventories rose by 3.0 million barrels last week; West Texas Intermediate crude futures dropped 2.1% to $61.66 per barrel. Shale leader EOG Resources (EOG 101.42, -5.52) was among the worst-performing energy names, dropping 5.2%, despite beating earnings and revenue estimates for the fourth quarter.

Meanwhile, the heavily-weighted health care sector (-1.6%) also finished behind the broader market, with Celgene (CELG 87.12, -8.66) leading the retreat. The biotechnology giant dropped 9.0%, settling at its lowest level in more than three years, after receiving a Refusal to File letter from the FDA regarding its multiple sclerosis drug ozanimod.

At the opposite end of the sector standings, the consumer discretionary group (-0.5%) outperformed, thanks in part to TJX (TJX 82.68, +5.37), which jumped 7.0% after reporting better-than-expected earnings and revenues for the fourth quarter and raising its profit guidance. Conversely, home improvement retailer Lowe's (LOW 89.59, -6.20) dropped 6.5% after missing fourth quarter earnings estimates and lowering its profit guidance.

The lightly-weighted real estate sector was the top-performing group with a slim loss of 0.1%.

In the bond market, U.S. Treasuries rallied on Wednesday, sending yields lower; the benchmark 10-yr yield dropped four basis points to 2.87%. Meanwhile, the 2-yr yield finished flat at 2.26%, but touched its highest level since September 2008 (2.28%) in intraday trading.

In currencies, the U.S. Dollar Index advanced 0.3% to 90.58, hitting its highest level in six weeks.

Reviewing Wednesday's batch of economic data, which included the second estimate of fourth quarter GDP, the Chicago PMI for February, Pending Home Sales for January, and the weekly MBA Mortgage Applications Index:

  • The second estimate of fourth quarter GDP pointed to an expansion of 2.5% ( consensus +2.5%). The first estimate came in at +2.6% last month.
    • Real final sales, which exclude the change in private inventories, were revised up to 3.3% from 3.2%. The fourth quarter growth rate was the best since the second quarter of 2015.
  • The Chicago PMI for February hit 61.9 ( consensus 64.5), down from 65.7 in January.
  • Pending Home Sales decreased 4.7% in January ( consensus +0.4%). Today's reading follows an unrevised 0.5% increase in December.
  • The weekly MBA Mortgage Applications Index increased 2.7% to follow last week's 6.6% decline.

On Thursday, investors will receive a slew of economic reports, including Personal Income ( consensus +0.3%) and Spending ( consensus +0.2%) for January at 8:30 AM ET, the PCE Price Index ( consensus +0.4%) and the core PCE Price Index ( consensus +0.3%) for January at 8:30 AM ET, weekly Initial Claims ( consensus 227K) at 8:30 AM ET, the ISM Index for February ( consensus 58.4) at 10:00 AM ET, and Construction Spending for January ( consensus +0.3%) at 10:00 AM ET.

In addition, Fed Chairman Jerome Powell will appear before the Senate Banking Committee, wrapping up his semiannual monetary policy testimony, and February auto and truck sales will be released throughout the day.

  • Nasdaq Composite: +5.4% YTD
  • S&P 500: +1.5% YTD
  • Dow Jones Industrial Average: +1.3% YTD
  • Russell 2000: -1.5% YTD
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