Day Traders Diary



The U.S. major indices finished mixed on Thursday, as ongoing uncertainty surrounding global issues kept many buyers on the sidelines. The S&P 500 finished flat, the Nasdaq Composite lost 0.4%, and the Dow Jones Industrial Average gained 0.3%.

In particular, the continued weakness from the Dow Jones Transportation Average (-1.6%), S&P 500 financial sector (-0.6%), and small-cap Russell 2000 (-1.6%), all of which play a key role in driving sentiment on the domestic economic outlook, and some cautious-sounding commentary on the economic outlook from European Central Bank President Draghi following today's ECB policy meeting, subdued investor confidence.

Concerns over slowing economic growth, and its adverse effect on corporate earnings, helped contribute to investors assuming some defensive positioning within the stock market.

The S&P 500 utilities (+0.9%), consumer staples (+0.7%), and real estate (+0.6%) groups finished atop the sector standings on Thursday.

Procter & Gamble (PG 96.49, +2.46, +2.6%) was a standout in the consumer staples sector, and Dow, after being upgraded to 'Buy' from 'Neutral' at Bank of America/Merrill Lynch.

The information technology (+0.2%) and energy (+0.4%) sectors also showed relative strength. Renewed leadership from Apple (AAPL 170.95, +1.85, +1.1%) helped lift the tech sector, while the energy space benefited from rising oil prices. WTI crude rose 2.8% to 52.58/bbl.

In addition, some key standouts from the industrial sector (-0.3%) included Delta Air Lines (DAL 53.55, -2.72, -4.8%) and General Electric (GE 7.20, +0.49, +7.3%).

Delta fell after it reaffirmed a FY19 EPS target range that had a midpoint below Wall Street's average expectation. GE, meanwhile, led the S&P 500 in gains after a surprise upgrade to 'Neutral' from 'Underweight' at JP Morgan, though maintained its $6.00 price target.

Separately, retail stocks were one of the hardest hit groups on Thursday, which helped drive the weakness in the consumer discretionary (-0.4%) sector. The SPDR S&P Retail ETF (XRT 42.52, -1.17) lost 2.7%. On a related note, Tailored Brands (TLRD 14.13, -6.01) and Oxford Industries (OXM 67.24, -7.57) dropped 29.8% and 10.1%, respectively, after some disappointing guidance/outlook.

Reviewing Thursday's economic data, which included Export and Import Prices for November, weekly Initial and Continuing Claims, and the Treasury Budget for November:

  • Import prices declined 1.6% in November after increasing 0.5% in October. Export prices declined 0.9% in November after increasing an upwardly revised 0.5% (from 0.4%) in October. Excluding fuel, import prices were down 0.3%. Excluding agricultural products, export prices were down 1.0%.
    • The key takeaway from the report is that it stirred some thinking that inflation trends could be in a topping phase, which is constructive in terms of the market's belief that the Federal Reserve is apt to take a more conservative path with future rate hikes.
  • Initial jobless claims for the week ending December 8 dropped by 27,000 to 206,000 ( consensus 228,000). Continuing claims for the week ending December 1 increased by 25,000 to 1.661 million.
    • The key takeaway from the report is that it helped quell for the time being burgeoning concerns about the rising trend in initial jobless claims.
  • The Treasury Budget for November showed a deficit of $204.9 billion versus a deficit of $138.5 billion for the same period a year ago. The Treasury Budget data is not seasonally adjusted, so the November deficit cannot be compared to the $100.9 billion deficit for October.
    • The fiscal year-to-date deficit is $305.4 billion versus a deficit of $201.8 billion for the same period a year ago. The budget deficit over the last 12 months is $882.6 billion.

Looking ahead, investors will receive Retail Sales for November, Industrial Production and Capacity Utilization for November, and Business Inventories for October on Friday. 

  • Nasdaq Composite +2.4% YTD
  • Dow Jones Industrial Average -0.5% YTD
  • S&P 500 -0.9% YTD
  • Russell 2000 -6.7% YTD
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