Day Traders Diary



    The S&P 500 fell 2.0% on Monday, as Apple (AAPL 194.17, -10.30, -5.0%) and semiconductor companies dragged on the broader market. The rout in the information technology sector (-3.5%) underpinned the benchmark index's retreat below its 200-day moving average (2762.39) and wiped out monthly gains for the tech-sensitive Nasdaq Composite, which lost 2.8% on Monday.

    Also, the Dow Jones Industrial Average lost 2.3%, and the Russell 2000 lost 2.0%.

    The market decline was triggered by Apple supplier Lumentum (LITE 37.50, -18.45, -33.0%) cutting its guidance due to a large, unnamed customer requesting to reduce shipments of laser diodes for 3D sensing. It is widely assumed that Apple is the customer in question, as it accounted for 30% of LITE's fiscal 2018 net revenue and uses laser diodes for its iPhone Face ID technology. This marks the second Apple supplier in as many weeks to have issued guidance warnings. 

    Chip stocks, subsequently, posted heavy losses, as the Philadelphia Semiconductor Index dropped 4.4%. Unsurprisingly, Apple chip suppliers Qorvo (QRVO 63.80, -4.35, -6.4%), Skyworks Solutions (SWKS 72.84, -3.82, -5.0%), and Cirrus Logic (CRUS 35.64, -5.74, -13.9%) underperformed. Meanwhile, notable chipmaker NVIDIA (NVDA 189.54, -16.13) erased yearly gains with a loss of 7.8%, and Advanced Micro (AMD 19.03, -2.00) lost 9.5%, though still sports a sizable yearly gain of 85.1%.

    The lack of investor confidence in growth stocks also manifested itself in the other FANG names. Facebook (FB 141.55, -3.41, -2.4%), Alphabet (GOOG 1038.63, -27.52, -2.6%), and Netflix (NFLX 294.07, -9.40, -3.1%) weighed on the communication services (-1.5%) sector, and Amazon (AMZN 1636.85, -75.58, -4.1%) led the consumer discretionary sector (-2.3%) lower.

    Conversely, real estate (+0.2%) was the only sector to finish with gains on Monday. The utilities (unch) and consumer staples (-0.7%) sectors also showed relative strength.

    Of note, former Dow component General Electric's (GE 7.99, -0.59) struggles continued with a loss of 6.9%. CEO Larry Culp said the company's biggest priority is to bring down leverage levels and has plenty of opportunity to do that through asset sales. Also, Dow component Goldman Sachs (GS 206.05, -16.60) fell 7.5%. The investment management company is reportedly being pressed by Malaysia for a full refund of around $600 million over alleged fraudulent activity regarding the 1MDB investment fund Goldman Sachs set up for it.

    In energy, Saudi Arabia announced it will reduce its oil exports in December by 500,000 barrels a day due to a seasonal slowdown in demand. The world's largest oil exporter also thinks a 1 million barrel per day cut by oil producers from October production levels might be necessary. United States President Donald Trump, in turn, tweeted his opposition to OPEC's desire to cut oil production, saying that oil prices should be lower based on supply. President Trump's tweet dampened an early WTI crude rebound, which backpedaled 0.5% to settle at $59.84/bbl.

    Separately, the bond market was closed on Monday in observance of Veterans Day, and investors did not receive any notable economic data.

    Elsewhere, Asian markets added slim gains with China's Shanghai Index showing relative strength (+1.2%). China-based e-commerce giant Alibaba (BABA 142.82, -2.03) recorded the biggest online shopping day in history on Sunday after it tallied $30.8 billion in sales. Shares slipped 1.4% on Monday, though. In Europe, the major indices closed on a lower note with Germany's DAX (-1.9%) leading the retreat.

    Looking ahead, investors will receive the NFIB Small Business Optimism Index for October and the Treasury Budget for October on Tuesday.

    • Nasdaq Composite +4.3% YTD
    • Dow Jones Industrial Average +2.7% YTD
    • S&P 500 +2.0% YTD
    • Russell 2000 -1.1% YTD
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