Day Traders Diary



    Wall Street struggled for direction on Wednesday, initially pulled lower by lagging tech shares only to regain its footing on headlines that the U.S. is proposing a new round of trade talks with China. The S&P 500 finished just slightly higher (+0.04%), and the Dow added 0.1%. The tech-heavy Nasdaq underperformed, shedding 0.2%.

    The heavily-weighted information technology (-0.5%) and financials (-0.9%) sectors, which make up roughly 40% of the broader market combined, kept the S&P 500 grounded despite gains from eight of its nine other groups. The consumer staples (+1.3%) and telecom services (+1.4%) sectors were the top performers.

    Apple (AAPL 221.07, -2.78) unveiled a trio of new iPhones -- iPhone Xs ($999), iPhone Xs Max ($1099), and iPhone Xr ($749) -- at its annual product event, extending last year's high-end iPhone X line, which was created in celebration of the iPhone's 10th anniversary. The company also announced a new Apple Watch, the Series 4, that has better fitness tracking and new health features.

    Shares of Apple were down going into the event and finished Wednesday lower by 1.2%, but remain up 30.6% for the year.

    Elsewhere in the tech space, chipmakers sold off, pushing the Philadelphia Semiconductor Index lower by 1.2%. Micron (MU 41.74, -1.86) was particularly weak, with shares falling 4.3% after being downgraded to 'Neutral' from 'Buy' at Goldman. Separately, Snap (SNAP 9.20, -0.69) dropped 7.0% to a new all-time low after BTIG lowered its price target to $5 a share.

    Looking at other markets, WTI crude futures extended Tuesday's rebound, climbing 1.4% to $70.18/bbl, helped by the weekly EIA inventory report, which showed that U.S. crude stockpiles declined by 5.3 million barrels last week. Meanwhile, U.S. Treasuries ticked higher, pulling the benchmark 10-yr yield, which hit a one-month high on Tuesday, down one basis point to 2.96%.

    Also of note, Hurricane Florence continued moving towards the Carolina coast, but was downgraded to a still-powerful Category 3 storm.

    Reviewing Wednesday's economic data, which included the Producer Price Index for August, the Fed's Beige Book, and the weekly MBA Mortgage Applications Index:

    • Producer prices slipped 0.1% in August ( consensus +0.2%), and core producer prices declined 0.1% ( consensus +0.2%). Year-over-year, producer prices are up 2.8% (vs +3.3% in July) and core producer prices have risen 2.3% (vs +2.7% in July).
      • The key takeaway from the report is that it will soothe some burgeoning inflation concerns, as the monthly declines led to a moderation in producer price inflation on a year-over-year basis. The latter point notwithstanding, the market is apt to maintain its view that the Federal Reserve remains on course to raise rates two more times this year.
    • Reports from the Federal Reserve Districts suggested that the economy expanded at a moderate pace through the end of August. Dallas reported relatively brisk growth, while Philadelphia, St. Louis, and Kansas City indicated somewhat below average growth. Businesses generally remained optimistic about the near-term outlook, though most Districts noted concern and uncertainty about trade tensions, which prompted some businesses to scale back or postpone capital investment.
    • The weekly MBA Mortgage Applications Index decreased 1.8% to follow last week's downtick of 0.1%.

    Looking ahead, investors will receive the August Consumer Price Index, weekly Initial Claims, and the August Treasury Budget on Thursday.

    • Nasdaq Composite +15.2% YTD
    • Russell 2000 +11.7% YTD
    • S&P 500 +8.1% YTD
    • Dow Jones Industrial Average +5.2% YTD

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