Day Traders Diary



Investors breathed a sigh of relief on Monday, pushing stocks solidly higher, after a U.S.-led strike on Syria over the weekend turned out to be less dramatic than many had feared.

The S&P 500 finished higher by 0.8% at 2677.84 after getting rejected at its 50-day moving average (2687). The Dow Jones Industrial Average and the Nasdaq Composite also finished a step below their 50-day moving averages, adding 0.9% and 0.7%, respectively.

U.S., U.K., and French forces carried out a much-anticipated missile attack against the Syrian government late Friday, targeting three sites associated with the production of chemical weapons following a suspected poison gas attack against the rebel-held town of Douma on April 7. Russian President Vladimir Putin -- who supports the Syrian government -- condemned the attack, saying additional strikes could invite chaos in global affairs, but made no mention of a military response to this particular incident -- giving the impression that it's now in the rear-view mirror.

That realization proved to be a positive for the equity market, but didn't bode so well for crude oil, which surged more than 8.0% last week on the bet that heightened tensions in the oil-rich Middle East would lead to a slowdown in production; West Texas Intermediate crude futures slid 1.6% to $66.18 per barrel. However, the energy sector, which typically moves in tandem with the price of crude oil, rallied 1.0%.

All 11 S&P sectors finished Monday in positive territory, with gains ranging from 0.4% to 1.5%. Lightly-weighted groups populated the top and bottom of the sector standings, with telecom services (+1.5%), utilities (+1.4%), and materials (+1.4%) closing at the top, and real estate (+0.4%) closing at the bottom. The heavily-weighted financial space (+0.5%) was the second-worst performer.

In corporate news, drug retailers CVS Health (CVS 66.10, +2.67) and Walgreens Boot Alliance (WBA 66.22, +2.40) rallied 4.2% and 3.8%, respectively, following a CNBC report that internet retail giant Amazon (AMZN 1441.50, +10.71) has shelved plans to sell and distribute pharmaceutical products to hospitals. Separately, Merck (MRK 58.65, +1.48) and Bristol-Myers (BMY 54.08, -4.57) both reported better-than-expected clinical trial results for their respective cancer treatments, but Merck surpassed expectations even more so than Bristol. Merck shares jumped 2.6%, while Bristol shares tumbled 7.8%.

On the earnings front, Bank of America (BAC 29.93, +0.13) struggled early after reporting above-consensus first quarter earnings ahead of Monday's opening bell, but eventually finished up 0.4%. Financial peer Charles Schwab (SCHW 53.08, +2.04) soared 4.0% after also beating bottom-line estimates for Q1. Moving to transports, JB Hunt (JBHT 119.75, +6.98) jumped 6.2% after beating both earnings and revenues estimates for the first quarter, helping to fuel a broad transport rally; the Dow Jones Transportation Average finished Monday higher by 2.3%.

In the bond market, U.S. Treasuries ended Monday slightly lower, which was a minor victory in light of the larger losses posted overnight. The 2-yr yield flirted with 2.40% before closing flat at 2.37%, while the benchmark 10-yr yield flirted with 2.87% before closing with a one basis point gain at 2.83%.

Reviewing Monday's economic data, which included Retail Sales for March, the Empire State Manufacturing Survey for April, Business Inventories for February, and the NAHB Housing Market Index for April:

  • March retail sales increased 0.6% ( consensus +0.4%). The prior month's reading was left unrevised at -0.1%. Excluding autos, retail sales increased 0.2%, as expected. The prior month's increased was left unrevised at 0.2%.
    • The key takeaway from the report is that March stopped a streak of three consecutive monthly declines in retail sales, although it also demonstrates that consumers continue to show some restraint in discretionary spending.
  • The Empire Manufacturing Survey for April declined to 15.8 ( consensus 20.0) from the prior month's unrevised reading of 22.5.
  • Business Inventories increased 0.6% in February ( consensus +0.6%). The January reading was left unrevised at +0.6%.
    • The key takeaway from the report is that inventory growth outpaced sales growth, as inventories increased for manufacturers (+0.3%), retailers (+0.4%), and merchant wholesalers (+1.0%).
  • The NAHB Housing Market Index for April decreased to 69 ( consensus 70) from an unrevised reading of 70 in March.

On Tuesday, investors will receive March Housing Starts ( consensus 1268K) and Building Permits ( consensus 1315K) at 8:30 AM ET and March Industrial Production ( consensus +0.3%) and Capacity Utilization ( consensus 77.8%) at 9:15 AM ET.

  • Nasdaq Composite: +3.7% YTD
  • Russell 2000: +1.8% YTD
  • S&P 500: +0.2% YTD
  • Dow Jones Industrial Average: -0.6% YTD

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