Day Traders Diary



Equities tumbled on Tuesday, with the Dow Jones Industrial Average notching its fifth straight loss, as the benchmark 10-yr Treasury yield continued its climb towards 3.0% and as investors digested the latest batch of first quarter earnings. The Dow ended lower by 1.7%, while the S&P 500 and the Nasdaq declined 1.3% and 1.7%, respectively.

The industrials (-2.8%), materials (-2.7%), and technology (-2.0%) sectors led Tuesday's broad-based retreat. Within the industrial space, 3M (MMM 201.13, -14.78), Caterpillar (CAT 144.44, -9.55), and Lockheed Martin (LMT 336.49, -22.11) lost between 6.2% and 6.8% after reporting their first quarter results -- which, headline-wise, came in better than expected. Caterpillar initially shot higher following the release of its report, but reversed after saying in its post-earnings conference call that margins in the first quarter will be the high water mark for the year.

Industrial giant United Technologies (UTX 122.10, -1.36) also moved lower despite an earnings beat, losing 1.1%.

That trend held within the technology sector, where giant Alphabet (GOOG 1019.98, -47.47) dropped 4.5% despite a blowout quarter; the purported bearish catalyst was the company's weaker-than-expected operating margin. Fellow FAANG stocks Facebook (FB 159.69, -6.15) and Netflix (NFLX 307.02, -11.67) also took a hit, losing around 3.7% apiece, and chipmakers struggled, evidenced by the 2.1% decline in the Philadelphia Semiconductor Index -- which closed right at its 200-day moving average.

The materials space, meanwhile, was led lower by mining company Freeport-McMoRan (FCX 16.08, -2.73), which dropped 14.5% after missing both earnings and revenue estimates for the first quarter. The other declining sectors finished with losses between 0.6% and 1.6%, and three groups -- utilities (+0.7%), telecom services (+1.2%), and real estate (+0.2%) actually finished in the green.

Other earnings-related movers included Verizon (VZ 49.67, +1.01), Coca-Cola (KO 43.07, -0.91), Eli Lilly (LLY 80.09, -0.11), Biogen (BIIB 262.15, +2.85), Travelers (TRV 132.88, -4.35), and Harley-Davidson (HOG 42.01, +1.00) -- most of which reported better-than-expected results. However, only Verizon, Biogen, and Harley-Davidson moved higher, adding between 1.1% and 2.4%. Eli Lilly slipped 0.1%, while Coca-Cola and Travelers lost 2.1% and 3.2%, respectively.

The major averages actually opened Tuesday's session in positive territory, hovering about 0.3% above their respective flat lines, but just couldn't foster any added buying momentum -- which, in and of itself, proved to be a bearish catalyst. A late rally helped trim losses a bit before the close; at its session low, the S&P 500 was down 2.0%.

In the bond market, the yield on the benchmark 10-yr Treasury note continued its climb towards the psychologically important 3.0% mark, actually touching it in intraday trade before finishing at 2.98% -- one basis point higher than Monday's close. The 2-yr yield, meanwhile, took a step back after closing Monday at a seven-year high, slipping one basis point to 2.46%.

Reviewing Tuesday's economic data, which included New Home Sales for March, the Conference Board's Consumer Confidence Index for April, the FHFA Housing Price Index for February, and the S&P Case-Shiller Home Price Index for February:

  • New Home Sales in March hit an annualized rate of 694,000, which is above the consensus of 631,000. The February reading was revised to 667,000 (from 618,000).
    • The key takeaway from the report is that new home sales activity was the strongest in the South and West regions, which are the nation's biggest markets, suggesting there is good underlying demand.
  • The consumer confidence reading for April increased to 128.7 ( consensus 126.1) from the prior month's revised reading of 127.0 (from 127.7).
    • The key takeaway from the report is that the percent of consumers expecting their income to decline over the coming months reached its lowest level (6%) since December 2000. That view could be a good portent for a pickup in consumer spending since income expectations are typically driven by feelings of job security.
  • The FHFA Housing Price Index rose 0.6% in February ( consensus +0.5%), while the January increase was revised to 0.9% from 0.8%.
  • The Case-Shiller 20-city Index increased 6.8% in February ( consensus +6.4%), while the January increase was left unrevised at 6.4%.

Wednesday's data will be limited to the weekly MBA Mortgage Applications Index, which will be released at 7:00 AM ET.

  • Nasdaq Composite: +1.5% YTD
  • Russell 2000: +1.2% YTD
  • S&P 500: -1.5% YTD
  • Dow Jones Industrial Average: -2.8% YTD



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