Day Traders Diary



    Stocks tumbled in Thursday's trading session, extending yesterday afternoon's slow and steady retreat, which was triggered by U.S. Treasury yields reaching multi-year highs. The S&P 500 was down as much as 1.4% in intraday trade, but bounced back late to close at -0.8%.

    As for the other major averages, the Dow Jones Industrial Average closed at -0.8%, while the tech-heavy Nasdaq Composite showed relative weakness, ending at -1.8%. The small-cap Russell 2000, which has struggled recently, lost 1.5% on Thursday, extending its weekly loss to 2.9%.

    A robust economic outlook, underlined by Wednesday's stronger-than-expected ADP Employment Change report for September -- which is a prelude to Friday's consequential nonfarm payrolls reading -- helped ignite the Treasury sell-off, thereby increasing yields. The yield on the benchmark 10-yr note climbed another four basis points on Thursday to 3.20% and is now up 16 basis points since Tuesday.

    Unsurprisingly, the rate-sensitive financials sector was the strongest-performing sector in today's session, adding 0.7%. However, nine of the 11 sectors finished in negative territory.

    Tech stocks were hit with news that China infiltrated leading companies', including Apple (AAPL 227.99, -4.08, -1.8%) and Amazon (AMZN 1909.42, -43.34, -2.2%), supply chains by implanting a spy chip in their servers. Both companies, however, denied the claim.

    In earnings news, Constellation Brands (STZ 222.10, +11.34) finished 5.4% higher after beating top and bottom line estimates and raising its guidance for the fiscal year.

    Also of note, Barnes & Noble (BKS 6.65, +1.19) closed 21.8% higher after the company decided to enter into a formal review process to evaluate strategic alternatives in response to multiple parties expressing interest to acquire the bookseller.

    In other markets, WTI crude fell 2.6% to $74.44 a barrel after reaching a four-year high yesterday; Looking ahead, U.S. sanctions on Iran, which holds the fourth largest supply of crude oil reserves, will take effect next month on November 4. Meanwhile, the U.S. Dollar Index fell 0.3% at 95.40, ending a six-day winning streak, despite the jump in yields.

    Reflective of today's price movements, CBOE Volatility Index, which is often referred to as the "investor fear gauge," catapulted as high as 32.9% before closing +21.8% at 14.14.

    Recapping Thursday's economic data, which included the weekly Initial Claims report and August's Factory Orders report:

    • Initial claims for the week ending September 29 decreased by 7,000 from the prior week to 207,000 ( consensus 210,000), while continuing claims for the week ending September 22 decreased by 13,000 to 1.650 million.
      • The key takeaway from the report is that it shows the labor market remains tight and conducive to an increase in wage growth.
    • Factory orders increased 2.3% in August ( consensus +1.8%) following an upwardly revised 0.5% decline (from -0.8%) in July.
      • The key takeaway from the report is that there wasn't much strength in factory orders outside transportation equipment; moreover, a downward revision to shipments of nondefense capital goods excluding aircraft will detract from Q3 GDP growth estimates.

    Looking ahead, investors will receive the Employment Situation report for September at 8:30 AM ET and the Consumer Credit report for August at 15:00 PM ET.

    • Nasdaq Composite +14.1% YTD
    • S&P 500 +8.5% YTD
    • Dow Jones Industrial Average +7.7% YTD
    • Russell 2000 +7.3% YTD

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