Day Traders Diary
Stocks cruised considerably higher on Tuesday, ignited by strong earnings at the open and then fueled by a resurgence in the heavily-weighted information technology sector (3.0%) throughout the day. The S&P 500 rocketed through its 200-day moving average, closing 2.2% higher and reducing its October loss to 3.6%.
As for the other major averages, the Dow Jones Industrial Average jumped 2.2%, the Nasdaq Composite surged 2.9%, and the Russell 2000 advanced 2.8%. The Dow and the Nasdaq both closed above their 200-day moving averages, but the Russell 2000 did not.
Investor sentiment was buoyed after several financial and health care giants reported upbeat earnings.
Investment banks Goldman Sachs (GS 221.70, +6.48, +3.0%) and Morgan Stanley (MS 45.94, +2.47, +5.7%) helped boost the financial sector (+1.6%) after reporting better-than-expected top and bottom lines. Asset management firm BlackRock (BLK 408.00, -18.94, -4.4%) weighed on the sector, though, after missing revenue expectations. BlackRock's pain worsened when CEO Larry Fink said that the company saw more than $30 billion of institutional non-ETF index equity outflows that were driven by client de-risking. Mr. Fink added that he thinks clients will continue to de-risk.
Health care sector (+2.9%) components Johnson & Johnson (JNJ 136.56, +2.61, +2.0%) and UnitedHealth (UNH 272.57, +12.32, +4.7%) contributed to the group's strong performance after better-than expected results. The health care sector is the second-best performing group this year with a 2018 gain of 12.5%; tech leads with a gain of 13.9%.
The tech sector "returned to form" on Tuesday when investors flocked to the high-growth assets that some considered to be oversold on a short term basis. Adobe Systems (ADBE 260.67, +22.66) had a very strong performance after it reaffirmed fourth quarter guidance and said it expects FY19 revenues to be up 20%. The software company led the S&P 500 with a gain of 9.5%.
Likewise, chip stocks outperformed, as the Philadelphia Semiconductor Index climbed 3.3%. Notable gainers included Intel (INTC 45.94, +1.41, +3.2%), Qualcomm (QCOM 66.12, +1.95, +3.0%), and NVIDIA (NVDA 245.83, +10.45, +4.4%). However, today's impressive performance brings the PHLX Index's yearly gain to just 2.4%.
Adding to Tuesday's gains was the communication services (+2.3%) sector, led by FANG members Alphabet (GOOG 1121.28, +29.03, +2.7%), Facebook (FB 158.78, +5.26, +3.4%), and Netflix (NFLX 346.40, +13.27, +4.0%). Conversely, laggards in the all-green sector standings were energy (+0.9%), consumer staples (+1.1), and utilities (+1.2%). The defensive-oriented utilities sector remains the only sector in October with monthly gains (+2.1%).
Separately, other markets remained mostly dormant on Tuesday. Treasuries barely moved, subduing current fears of rising interest rates for now. The Fed-sensitive 2-yr yield added one basis point to 2.86%, while the benchmark 10-yr yield declined one basis point to 3.16%. The U.S. Dollar Index traded near its flat line (94.77), and WTI crude settled 0.1% higher at $71.91/bbl with investors keeping an eye on U.S.-Saudi-Arabia tensions. The CBOE Volatility Index (VIX) fell 16.1% to 17.87, retreating from last week's seven-month high.
Reviewing Tuesday's economic data, which included Industrial Production and Capacity Utilization for September, Jobs Openings for August, and the NAHB Housing Market Index for October:
On Wednesday, investors will receive the weekly Mortgage Applications Index, Housing Starts and Building Permits for September, and the minutes from the September FOMC meeting.
- Headlines provided by Briefing.com