Day Traders Diary



Stocks ended a three-session skid on Wednesday as a heap of corporate news served to distract investors from escalated U.S.-China trade tensions. The Nasdaq and the Russell 2000 rallied to new record highs, adding around 0.7% apiece, and the S&P 500 ticked up 0.2%. The Dow underperformed though, shedding 0.2%.

Walgreens Boots Alliance (WBA 68.00, +3.39) will be joining the Dow Jones Industrial Average on June 26, taking the spot of General Electric (GE 12.88, -0.07), which was one of the original Dow components and has been a continuous part of the average for more than a century. The decision follows a disastrous 18-month stretch for GE shares, which have dropped around 60% since the end of 2016.

Media names returned to the spotlight on Wednesday after Walt Disney (DIS 107.15, +1.05) increased its offer for 21st Century Fox's (FOXA 48.08, +3.37) entertainment assets. Disney is now offering $35 per share, up from $28 per share and better than last week's offer from Comcast (CMCSA 33.39, +0.58) of $35 per share. Fox shares surged 7.5%.

Elsewhere, Oracle (ORCL 42.82, -3.45) shares dropped 7.5% to a 15-month low after the company's quarterly update provided less insight than usual into its growing cloud business. Meanwhile, shares of Starbucks (SBUX 52.22, -5.21) tumbled 9.1% to a 20-month low after the coffee giant announced it will be scaling back store growth and closing underperforming urban locations.

Most S&P 500 sectors finished in the green, but gains were pretty modest; other than real estate (+1.1%), no group added more than 0.5%. The consumer discretionary (+0.5%) and energy (+0.4%) sectors were the top-performing groups, but the top-weighted technology sector (+0.3%) also had a relatively solid showing. Within the tech space, shares of Facebook (FB 202.00, +4.51) jumped 2.3% to a new all-time high, helped by reports that its photo-sharing subsidiary Instagram has reached 1 billion monthly users.

At the opposite end of the sector standings, the heavily-weighted financial space ended lower by 0.3% even though the 2s-10s spread widened, rebounding from its lowest level in a decade. The yield on the benchmark 10-yr Treasury note advanced four basis points to 2.93% while the 2-yr yield climbed two basis points to 2.57%. The telecom services sector was the worst-performing group with a loss of 1.0%.

Outside of equities, West Texas Intermediate crude futures rallied on Wednesday, rising 1.3% to $65.71 per barrel, after the Department of Energy reported that U.S. crude stockpiles decreased for the second week in a row, declining by 5.9 million barrels. The U.S. Dollar Index ticked up 0.1% to 94.73.

Reviewing Wednesday's economic data, which included the Existing Home Sales report for May, the Current Account Balance for the first quarter, and the weekly MBA Mortgage Applications Index:

  • Existing home sales decreased 0.4% in May to an annualized rate of 5.43 million units ( consensus 5.55 million). The April reading was revised to 5.45 million (from 5.46 million).
    • The key takeaway from the report remains the same: notable supply constraints continue to act as a drag on overall sales. The limited inventory -- and the high prices on available inventory -- is crimping affordability, particularly for first-time buyers; moreover, all prospective buyers are feeling affordability pressures from rising mortgage rates and home prices rising faster than income.
  • The current account deficit for the first quarter totaled $124.1 billion ( consensus -$129.2 billion). The fourth quarter deficit was revised to $116.1 billion from $128.2 billion.
  • The weekly MBA Mortgage Applications Index rose 5.1% to follow last week's decline of 1.5%.

On Thursday, investors will receive the weekly Initial Claims report ( consensus 220K), the Philadelphia Fed Index for June ( consensus 27.0), the FHFA Housing Price Index for April, and the Conference Board's Leading Economic Index for May ( consensus +0.4%).

  • Nasdaq Composite +12.7% YTD
  • Russell 2000 +11.2% YTD
  • S&P 500 +3.5% YTD
  • Dow Jones Industrial Average -0.3% YTD

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