Day Traders Diary



The major averages finished the midweek session on a lower note despite an upbeat quarterly earnings report from Apple (AAPL 176.57, +7.47) and a status quo directive from the Federal Open Market Committee. The S&P 500 and the Dow lost 0.7% apiece, while the tech-heavy Nasdaq declined 0.4%. Small caps advanced though, sending the Russell 2000 higher by 0.3%.

As expected, the Fed unanimously decided to leave the federal funds target range unchanged at 1.50% to 1.75% on Wednesday while laying the groundwork for a rate hike at the June meeting -- which would be the second rate increase of 2018. Following the policy directive -- which noted that inflation on a 12-month basis is expected to run "near" the Fed's 2.0% target over the medium term -- the market is still anticipating at least three rate hikes in total this year, with the chances of a fourth hike sitting near 50% (according to the fed funds futures market).

The S&P 500 briefly touched positive territory following the Fed's decision, reclaiming the modest loss it held throughout the morning, but soon moved sharply lower, notching new session lows along the way. The benchmark index never recovered from the late-afternoon drop and eventually finished near its worst mark of the day.

Wednesday's ending, while bitter, wasn't really all that surprising as equity futures struggled to take off overnight despite an upbeat earnings report from Apple -- the S&P 500's largest and most influential component -- which was released on Tuesday evening. Apple beat earnings estimates for its fiscal second quarter, raised its profit guidance for Q3, increased its share repurchase program by $100 billion, and raised its dividend by 16%. The tech giant's shares rallied 4.4% following the report, as one might expect, but the S&P's technology sector finished a tick lower.

Social media giant Facebook (FB 176.07, +2.21) did have a positive session though, adding 1.3%, after its rival Snap (SNAP 11.03, -3.10) missed revenue estimates and reported lower-than-expected daily active users (DAUs) for the first quarter; SNAP shares tumbled 21.9%, hitting a new all-time low.

In total, 10 of the 11 S&P groups finished Wednesday in the red, with financials (-1.2%), health care (-1.4%), consumer staples (-1.9%), and telecom services (-1.8%) leading the retreat. Gilead Sciences (GILD 66.88, -5.68) led the health care sector lower, dropping 7.8%, after reporting worse-than-expected earnings and revenues for Q1. Meanwhile, in the consumer staples group, CVS Health (CVS 65.94, -2.06) declined 3.0% despite beating Q1 earnings estimates and issuing upbeat guidance. Energy (+0.4%) was the only advancing sector.

U.S. Treasuries finished Wednesday on a modestly higher note, with yields slipping across the curve; the benchmark 10-yr yield declined one basis point to 2.96%. Meanwhile, the U.S. Dollar Index jumped 0.4% to 92.59, a fresh 2018 high, and WTI crude futures rallied 0.9% to $67.91 per barrel.

On the data front, the ADP National Employment report for April was released on Wednesday, showing an increase of 204,000 ( consensus 225,000); the March reading was revised to 228,000 from 241,000. The ADP reading is seen as a prelude to the BLS's nonfarm payrolls figure ( consensus 190,000), which will be released on Friday.

Looking ahead to Thursday, investors will receive a big batch of economic data that includes the preliminary readings for first quarter Productivity ( consensus +0.8%) and Unit Labor Costs ( consensus +3.0%), the March Trade Balance report ( consensus -$49.8 billion), weekly Initial Claims ( consensus 220K), March Factory Orders ( consensus +1.2%), and the ISM Services Index for April ( consensus 58.3).

  • Nasdaq Composite: +2.9% YTD
  • Russell 2000: +1.3% YTD
  • S&P 500: -1.4% YTD
  • Dow Jones Industrial Average: -3.2% YTD

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