Day Traders Diary



Equities settled Tuesday little changed as investors showed a muted reaction to President Trump's historic summit with North Korean leader Kim Jong Un. The S&P 500 ticked higher for a third straight session, adding 0.2%, while the Nasdaq (+0.6%) and the Russell 2000 (+0.5%) finished at new all-time highs. The Dow finished flat.

Mr. Trump and Mr. Kim ended their Tuesday meeting in Singapore -- the first ever meeting between a sitting U.S. president and a North Korean leader -- with a joint statement in which North Korea reaffirmed its commitment to completely denuclearize and the U.S. promised "security guarantees" -- including the suspension of military exercises on the Korean Peninsula. The two nations will engage in follow-up negations to work out the specific details of the agreement.

The S&P 500 sectors were pretty evenly mixed on Tuesday, with six advancing and five declining. The utilities sector (+1.3%) was the top performer, bouncing back from a disappointing start to the month, followed by the top-weighted technology sector (+0.6%). Within the tech space, Twitter (TWTR 43.49, +2.07) soared 5.0%, hitting a three-year high, after JPMorgan raised its target price to $50 from $39.

On the downside, the energy sector (-0.8%) settled at the bottom of the sector standings, even though crude prices ticked higher. WTI crude futures advanced 0.4% to $66.36 per barrel on Tuesday, their best close of the month. The heavily-weighted financials sector (-0.3%) also underperformed.

In earnings news, Dave & Busters (PLAY 55.82, +7.99) jumped 16.7% after reporting better-than-expected earnings and revenues for the first quarter. Restoration Hardware (RH 155.00, +36.27) did even better, spiking 30.6%, after beating earnings estimates and raising its guidance.

Elsewhere, U.S. Treasuries finished mixed, with shorter-dated issues showing relative weakness. The yield on the 2-yr Treasury note climbed three basis points to 2.55%, while the yield on the benchmark 10-yr Treasury note finished flat at 2.96%. The 10-yr yield touched 2.98% in early-morning trading before falling back. Meanwhile, the U.S. Dollar Index got off to a flat start, but rebounded to end the day higher by 0.3% at 93.80.

Reviewing Tuesday's economic data, which included the Consumer Price Index for May and the May Treasury Budget:

  • Total CPI increased 0.2% ( consensus +0.3%) in May, and core CPI, which excludes food and energy, also rose 0.2% ( consensus +0.2%). On a year-over-year basis, total CPI is up 2.8% (vs +2.5% in April), and core CPI is up 2.2% (vs +2.1% in April).
    • The key takeaway from the Consumer Price Index for May is that it validated the expectation for a 25 basis points rate hike by the FOMC at its June meeting and provided some backing for the prevailing expectation among Fed members that there will be at least three rate hikes in 2018.
  • The Treasury Budget for May showed a deficit of $146.8 billion versus a deficit of $88.4 billion for the same period a year ago.
    • The Treasury Budget data is not seasonally adjusted, so the May deficit cannot be compared to the $214.3 billion surplus for April.

On Wednesday, the Fed's latest policy directive will cross the wires at 2:00 PM ET, and the market is all but certain that it will include the second rate hike of 2018. The Fed will also release updated economic and interest-rate projections. Separately, the Producer Price Index for May will be released at 8:30 AM ET.

  • Nasdaq Composite +11.6% YTD
  • Russell 2000 +9.6% YTD
  • S&P 500 +4.2% YTD
  • Dow Jones Industrial Average +2.4% YTD

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