Day Traders Diary



The S&P 500 gained 0.4% on Wednesday, helped by softening trade tensions, easing anxieties over U.S. monetary policy, and rebounding oil prices ($52.20/bbl, +$2.54, +5.1%). The Dow Jones Industrial Average gained 0.4%, the Nasdaq Composite gained 0.9%, and the Russell 2000 gained 0.9%.

During the recent stock market rally, the market has shown a propensity not only to buy beaten-down stocks, but also to buy on intraday dips. Wednesday was no exception.

The S&P 500 briefly fell into negative territory (-0.2%) in the early going, but ultimately rebounded before running into some resistance as it approached the 2600 level shortly after the release of the FOMC minutes from the December policy meeting.

Regarding the minutes, they revealed a view that the path of U.S. monetary policy is "less clear" than before, and a contention that the Fed can "afford to be patient" about future rate hikes.

In light of more recent remarks from other Fed officials discussing a more patient-minded approach, namely Fed Chair Powell, the view communicated in the minutes wasn't altogether surprising.  Roughly an hour after their release, the S&P 500 was trading at a level close to where it was trading when the minutes were released at 2:00 p.m. ET.

Stock prices wavered a bit late in the day, however, after some discouraging news out of Capitol Hill. President Trump tweeted his dissatisfaction over a meeting with Congressional Democrats, calling it a "total waste of time." The S&P 500 ended off its best levels of the day, but still managed to end on an uptick in the closing minutes of trading.

Within the S&P 500, the energy (+1.5%) and information technology (+1.2%) sectors led the broader market higher. Conversely, the defensive-oriented consumer staples (-1.0%), utilities (-0.7%), and real estate (-0.4%) sectors underperformed.

The Philadelphia Semiconductor Index (+2.5%) was a notable outperformer on Wednesday, despite Apple (AAPL 153.31, +2.56, +1.7%) supplier Skyworks Solutions (SWKS 67.69, +2.50, +3.8%) lowering its fiscal first quarter guidance.

Some catalysts that underpinned the group's performance included (1) the positive price action in Skyworks despite the bad news, which was interpreted as a sign that the bad news was already priced in, (2) Bernstein upgrading Micron (MU 35.44, +1.70, +5.0%) to 'Outperform' from 'Market Perform', and (3) optimism over the trade discussions with China.

The U.S. Treasury yield curve steepened a bit on Thursday, undoing the prior session's flattening. The 2-yr yield decreased four basis points to 2.55%, and the 10-yr yield added one basis point to 2.73%. The U.S. Dollar Index fell 0.8% to 95.13.

Separately, the weekly MBA Mortgage Applications Index spiked 23.5% from the prior 8.5% decrease last week.

Looking ahead, investors will receive the weekly Initial and Continuing Claims report on Thursday.

  • Russell 2000 +6.7% YTD
  • Nasdaq Composite +4.9% YTD
  • S&P 500 +3.1% YTD
  • Dow Jones Industrial Average +2.4% YTD

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