Day Traders Diary



Wall Street closed on a mixed note on Tuesday, with the S&P 500 losing 0.2%, ahead of a big batch of earnings reports. The market has heard its share of guidance cuts during the Q4 earnings season so far, which presumably led investors to employ some caution in front of Apple's (AAPL 154.68, -1.62, -1.0%) report after Tuesday's close.

The blue-chip Dow Jones Industrial Average gained 0.2%, the tech-sensitive Nasdaq Composite lost 0.8%, and the small-cap Russell 2000 lost 0.1%.

The S&P 500 communication services (-1.1%), information technology (-1.0%), and consumer discretionary (-0.8%) sectors underperformed the broader market. Conversely, the industrials (+1.4%), materials (+1.1%), and real estate (+0.8%) sectors outperformed.

Buying interest was largely absent within the market's most heavily-weighted tech sector in front of Apple's earnings report. Investors were perhaps fearful that there could be some cautious-minded guidance, with a nod to weakness in China, that could drive a spillover effect to Apple suppliers and the broader tech sector.

Dow component 3M (MMM 196.95, +3.75, +1.9%) for its part lowered its fiscal 2019 guidance, in part due to slowing segments in China. The stock outperformed, though, helped by an earnings beat and by the view that its guidance cut was better than feared.

Fellow Dow components Pfizer (PFE 40.77, +1.24, +3.1%) and Verizon (VZ 53.28, -1.79, -3.3%) also reported better-than-expected profit estimates and issued underwhelming guidance. Pfizer guided fiscal 2019 earnings and revenue below consensus, and Verizon issued mixed guidance for fiscal 2019.

In other earnings news, Xerox (XRX 27.07, +2.77, +11.4%), Corning (GLW 33.72, +3.36, +11.1%), and Whirlpool (WHR 136.49, +12.03, +9.7%) all climbed after impressing investors with their corporate results.

U.S. Treasuries edged higher, pushing yields lower across the curve. The 2-yr yield decreased one basis point to 2.57%, and the 10-yr yield decreased three basis points to 2.71%. The U.S. Dollar Index gained 0.1% to 95.82. WTI crude rose 2.4% to $53.22/bbl.

Overseas, the UK Parliament backed an amendment to renegotiate a Brexit deal, according to Bloomberg. The outcome produced little effect on U.S. markets, but the voting was seen as a victory for UK Prime Minister Theresa May.  The offset to the news is that the EU has said the Brexit deal is not renegotiable, particularly with respect to the Irish backstop worked out previously in the Withdrawal Agreement.

Reviewing Tuesday's economic data, which included the Conference Board's Consumer Confidence Index for January and the S&P Case-Shiller Home Price Index for November:

  • The Conference Board's Consumer Confidence Index dropped to 120.2 in January ( consensus 126.1) from a downwardly revised 126.6 (from 128.1) in December. 
    • The key takeaway from the report is that it showed the outlook among consumers was dampened by the volatility in financial markets and the government shutdown, which threatens to register in consumer spending data that would be a drag on first quarter GDP.
  • The S&P Case-Shiller Home Price Index for November increased 4.7% ( consensus 4.9%), down from an unrevised increase of 5.0% in October.

Looking ahead, investors will receive the FOMC Rate Decision for January, Pending Home Sales for December, the ADP Employment Change for January, and the weekly MBA Mortgage Applications Index on Wednesday.

  • Russell 2000 +9.1% YTD
  • Nasdaq Composite +5.9% YTD
  • Dow Jones Industrial Average +5.4% YTD
  • S&P 500 +5.3% YTD


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