Day Traders Diary



The S&P 500 has fallen 1.1% today and is currently trading near session lows as investors express concern over global economic growth. The Dow Jones Industrial Average is lower by 1.1%, the Nasdaq Composite is lower by 1.6%, and the Russell 2000 has fallen 1.4%.

Today's sell-off on Wall Street follows disappointing performances in both Europe and Asia. China's Shanghai Composite slumped 2.9%, touching a four-year low and extending its yearly loss to nearly 25%. Meanwhile, Japan's Nikkei fell 0.8% after the country reported its first year-over-year export decline (-2.1%) since November 2016.

Across the pond, the major European bourses also settled Thursday lower amid a burgeoning angst that the Italian budget situation could get nasty and upset global financial markets.

U.S. Treasury Secretary Steven Mnuchin announced earlier today that he would be pulling out of next week's Future Investment Initiative conference in Saudi Arabia. The decision comes as investigators try to get to the bottom of the disappearance of dissident Saudi journalist Jamal Khashoggi, who many believe was ordered to be killed by Crown Prince Mohammed bin Salman.

Weighing on the S&P 500 today are the communication services (-1.4%) and the information technology (-1.4%) sectors. Notable lagging companies within the groups include Facebook (FB 155.32, -4.14, -2.6%), Alphabet (GOOG 1091.94, -23.66, -2.1%), Apple (AAPL 217.60, -3.57, -1.6%), and Adobe Systems (ADBE 249.38, -9.53, -3.7%).

The industrial sector is also notably weaker following some disappointing headlines on the earnings front. United Rentals (URI 124.10, -14.92, -10.8%) topped third quarter expectations but lowered its free cash flow guidance. Meanwhile, Snap-On (SNA 154.13, -13.43, -8.0%) came up shy of third quarter revenue estimates, and Textron (TXT 58.65, -6.13, -9.5%) fell well short of third quarter earnings and revenue estimates. The industrial group is down 1.3%.

On a positive note, the defensive consumer staples, utilities, and real estate sectors are in the green, sporting gains of around 0.3% apiece. Within the consumer staples space, tobacco giant Philip Morris International (PM 87.44, +2.88) is up 3.4% after beating both top and bottom line estimates.

Also of note, Dow component Travelers (TRV 124.20, -2.23) has fallen 1.8% despite reporting better-than-expected profits for the third quarter.

Reviewing today's economic data, which included the weekly Initial Claims report, the Philadelphia Fed Index for October, and the Conference Board's Leading Economic Index for September:

  • Initial claims for the week ending October 13 dropped by 5,000 to 210,000 ( consensus 212,000). Continuing claims for the week ending October 6 decreased by 13,000 to 1.640 million, which is the lowest level since August 4, 1973.
    • The key takeaway from the report is that it covered the week in which the survey for the October employment report was conducted. Accordingly, with the low level of initial claims, economists will have a basis to forecast another solid increase in nonfarm payrolls.
  • The Philadelphia Fed Index eased to 22.2 in October ( consensus 20.0) from 22.9 in September. The dividing line between expansion and contraction for this regional manufacturing survey is 0.0.
    • The key takeaway from this report is that manufacturers remain optimistic about the outlook, as 48% of respondents expect business activity to increase over the next six months versus only 14% that expect declines.
  • The Conference Board's Leading Economic Index increased 0.5% in September ( consensus +0.5%) after increasing an unrevised 0.4% in August.
    • The key takeaway from the report is that there was widespread strength in the basket of leading indicators. The strongest contribution came from average consumer expectations for business conditions (+0.14 percentage points), which should be constructive for consumer spending activity.
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