Day Traders Diary



Equities advanced for a third consecutive session on Thursday, with energy and materials shares leading a broad-based rally.

The benchmark S&P 500 jumped 0.7% to 2662.84, trimming its yearly loss to 0.4%, while the Nasdaq Composite climbed 0.5% to 7076.55, and the Dow Jones Industrial Average rallied 1.0% to 24505.22. The S&P 500 and the Dow never touched negative territory -- the Nasdaq did briefly -- and all three major averages finished in the upper half of their trading ranges. Action was somewhat volatile -- although not as volatile as other sessions this week -- but the CBOE Volatility Index slipped 1.43 points, or 7.1%, to 18.63 -- a two-week low.

10 of 11 S&P sectors finished in positive territory, with growth-sensitive groups like consumer discretionary (+1.4%), industrials (+1.0%), energy (+1.8%), and materials (+1.9%) leading the charge. The top-weighted technology sector couldn't keep pace, however, which was somewhat discouraging, but the group still finished with a gain of 0.4%.

Within the tech space, Facebook (FB 159.34, +4.24) outperformed, adding 2.7%, after CEO Mark Zuckerberg said he doesn't think the #deletefacebook movement has had a material impact. Chipmakers lagged, however, pushing the PHLX Semiconductor Index lower by 1.0%. NVIDIA (NVDA 221.38, -4.86) lost 2.2% following some cautious commentary out of Citron Research, and Micron (MU 49.84, -3.55) tumbled 6.7% after a director disclosed that she sold 25,000 shares on April 2. UBS initiated a 'Sell' rating following the disclosure.

Meanwhile, the heavily-weighted health care sector finished at the bottom of the sector standings, shedding 0.1%, as biotechnology names underperformed -- evidenced by the 1.6% decline in the iShares Nasdaq Biotechnology ETF (IBB 104.17, -1.72). Biogen (BIIB 264.98, -7.42) was particularly weak, losing 2.7%, after being downgraded to 'Equal Weight' from 'Overweight' at Barclays.

Despite the pockets of weakness, the broader market was strong through most of Thursday's session. A Bloomberg TV interview with Atlanta Fed President Raphael Bostic contributed to the positive bias, as Mr. Bostic, who is a voting member on this year's FOMC, said he's comfortable with inflation going above the Fed's 2.0% target -- which suggests that he may favor a less aggressive approach to hiking interest rates. However, with the March Employment Situation Report due Friday, investors fought the urge to tamper with their rate-hike expectations.

U.S. Treasuries largely kept overnight losses intact on Thursday, extending them just slightly during intraday trade. The yield on the benchmark 10-yr Treasury note advanced four basis points to 2.83%, closing at its highest level in more than a week, while the 2-yr yield ticked up two basis points to 2.30%.

Reviewing Thursday's economic data, which was limited to the Trade Balance for February and weekly Initial Claims:

  • The February trade balance showed a deficit of $57.6 billion ( consensus -$56.7 billion). The January deficit was revised to $56.7 billion from $56.6 billion.
    • The key takeaway from the report is twofold: (1) it underscores that trade will be a drag on Q1 GDP growth and (2) it will continue to fan the rhetorical flames regrading trade imbalances.
  • The latest weekly initial jobless claims count totaled 242,000, while the consensus expected a reading of 225,000. Today's tally was above the revised prior week count of 218,000 (from 215,000). As for continuing claims, they declined to 1.808 million from a revised count of 1.872 million (from 1.871 million).
    • The key takeaway from the report is that the headline disappointment will be washed away as some normal volatility in a data series that has been persistently encouraging. To that end, this is the 161st straight week initial claims have held below 300,000.

On Friday, investors will receive the Employment Situation Report for March, which the consensus expects will show the addition of 175,000 nonfarm payrolls, an increase of 0.2% in average hourly earnings, and an unemployment rate of 4.0%. The report, which has the potential to move the financial markets, will be released at 8:30 AM ET. The much less influential Consumer Credit Report for February ( consensus $15.0 billion) will be released in the afternoon at 3:00 PM ET.

  • Nasdaq Composite: +2.5% YTD
  • S&P 500: -0.4% YTD
  • Dow Jones Industrial Average: -0.9% YTD
  • Russell 2000: +0.5% YTD

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