Day Traders Diary
Apparently, a trade war started on Friday -- or so it was said -- yet the stock market acted as if there was a daisy stuck in the barrel of every trade threat. For the second day in a row, the stock market ignored the trade conflict between the U.S. and China (and other countries for that matter) and rallied around a pleasing employment report for June.
It was clear to see in the futures market this morning how the employment report was the inflection point for a shift in trading sentiment. Prior to its release at 8:30 a.m. ET, the S&P futures were down as many as seven points and signalling a modestly lower start for the broader market.
Following the release, they turned positive, and although the open to today's session was a bit tentative, the bulls soon took command of today's tape, ceding some ground only in a profit-taking retreat in the last 30 minutes of trading.
The catalyst for the upside bias was the recognition that the June employment report had a familiar Goldilocks hue to it. Specifically, it featured solid nonfarm payrolls growth (+213,000) and a subdued 2.7% year-over-year gain in average hourly earnings that kept inflation worries, and aggressive rate-hike worries, at bay.
The stock market wasn't the only beneficiary of that fairy-tale theme. The Treasury market also enjoyed the not-too-hot-not-too-cold narrative.
The 2-yr note yield, which is more sensitive to changes in the fed funds rate, fell three basis points to 2.53% while the 10-yr note yield, which is more sensitive to inflation, slipped one basis point to 2.83%.
Within the stock market, every sector was a winner.
Gains ranged from 0.3% (consumer staples) to 1.4% (health care). The latter was helped by a huge gain in Biogen (BIIB 357.48, +58.67, +19.6%), which surged after announcing encouraging, and surprising, Phase II trial results for its Alzheimer's drug.
A 1.2% increase in the information technology sector, which flowed from the outperformance of Apple (AAPL 187.97, +2.57, +1.4%), Facebook (FB 203.23, +4.78, +2.4%), Alphabet (GOOG 1140.17, +15.90, +1.4%), and Microsoft (MSFT 101.16, +1.40, +1.4%), solidified the upside bias and drove the outperformance of the Nasdaq Composite (+1.3%).
Trade matters were talked about widely. The U.S. and China both pressed ahead with tariffs on $34 billion worth of imported goods from each country, which was not a surprise, and President Trump suggested it's possible tariffs on more than $500 billion of Chinese goods could be levied over time if necessary.
The latter was a surprise, but judging by the stock market's performance, it was not unnerved by the remark.
Taking a closer look at today's economic data:
Monday's economic calendar will feature the Consumer Credit report (Briefing.com consensus $12.4 billion) for May.
Headlines provided by Briefing.com
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