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Leigh Baldwin & Co.

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Day Traders Diary

3/8/18

U.S. equities ticked higher on Thursday as investors awaited President Trump's official approval of tariffs on steel and aluminum imports, which he gave minutes before the closing bell. The S&P 500 finished with a gain of 0.5%, closing at its best mark of the day, while the Dow and the Nasdaq added 0.4% apiece.

The market drifted near its unchanged mark through most of Thursday's session, but volatility started to pick up in the afternoon following an Associated Press report that Canada and Mexico will be exempt indefinitely from the president's proposed tariffs; earlier reports said that the two countries would be exempt initially, but a continuation of that status was based on their willingness to renegotiate the North American Free Trade Agreement (NAFTA).

From there, equities bounced around during President Trump's press conference, which began just 30 minutes before the closing bell. The president signed two proclamations that implemented the tariffs on steel and aluminium imports, but exempted Mexico and Canada. However, Mr. Trump said he will give other nations the opportunity to justify why they should also not be included, emphasizing that he is seeking "fairness." 

10 of 11 S&P sectors finished in positive territory, with countercyclical groups like health care (+0.7%), consumer staples (+0.9%), and utilities (+0.7%) closing at the top of the leaderboard. The energy sector (-0.1%) was the one declining group.

In corporate news, Express Scripts (ESRX 79.72, +6.30) jumped 8.6% after agreeing to be acquired by Cigna (CI 172.00, -22.25) for approximately $67 billion in cash and stock; conversely, Cigna dropped 11.5%. Meanwhile, Kroger (KR 22.98, -3.25) tumbled 12.4% to a three-month low after issuing disappointing profit guidance, and Costco (COST 185.69, -1.67) lost 0.9% after missing earnings estimates for its fiscal second quarter.

Meanwhile, Treasury yields settled Thursday a tick lower, with the benchmark 10-yr yield slipping one basis point to 2.87%.

In Europe, the European Central Bank left its key policy rates unchanged on Thursday, as expected, and removed from its policy statement a promise to increase its bond purchases if needed. The latter move was seen as a small step towards normalization following years of ultra-accommodative policy. In addition, the ECB reaffirmed that its net asset purchases will remain at a monthly pace of EUR30 billion until the end of September 2018, or beyond, if necessary.

The euro dropped 0.9% against the U.S. dollar to 1.2303 following the ECB decision, hitting a one-week low, while European equities rallied to new session highs. France's CAC led the charge, finishing Thursday with a gain of 1.3%, while Germany's DAX and the UK's FTSE added 0.9% and 0.6%, respectively.

In Asia, equity indices also ended Thursday in positive territory, adding between 0.5% and 1.5%.

Investors received just one economic report on Thursday, weekly Initial Claims, which came in higher than expected (231K actual vs 220K Briefing.com consensus). As for continuing claims, they declined to 1.870 million from a revised count of 1.934 million (from 1.931 million). The report will likely be glossed over as it doesn't alter the market's perspective on the claims trend, and it comes just one day ahead of the much more influential Employment Situation Report for February.

The Employment Situation Report for February will be released at 8:30 AM ET on Friday, and the Briefing.com consensus expects that it will show the addition of 210,000 nonfarm payrolls, an increase of 0.2% in average hourly earnings, and an unemployment rate of 4.0% (down from 4.1% in January).

Headlines provided by Briefing.com

 

 

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