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Leigh Baldwin & Co.

112 Albany Street, Cazenovia, NY 13035 | Phone: (315) 655-2964 Toll Free: 1-800-659-8044

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Day Traders Diary

9/14/12

Today's session started on a positive note as stocks appeared poised for a second day of broad post-FOMC gains. However, the major averages marked their respective session highs during the first hour of trade and headed lower since. The Nasdaq was able to outperform as it held the bulk of its gains throughout the day. Afternoon selling pressure increased slightly after Egan Jones lowered the credit rating of the U.S. from 'AA' to 'AA-.' Looking at the major indices, the Nasdaq led the way with a 0.9% gain while the Dow and S&P 500 added 0.4% each.

Financial stocks continued to rally after yesterday's news. The SPDR Financial Select Sector ETF (XLF 16.28, +0.13) closed higher by 0.8% as most major names advanced. The ETF has seen a 4.0% rally since the Fed's announcement. Bank of America (BAC 9.55, +0.15), Morgan Stanley (MS 18.24, +0.34), and Wells Fargo (WFC 36.13, +0.58) all posted gains near 1.5%. European financials were also in focus as monetary easing in the U.S. carries global implications. Barclays (BCS 14.81, +0.46), Deutsche Bank (DB 44.28, +1.41), and UBS (UBS 13.48, +0.46) all gained near 3.5%.

Stocks within the defensive telecom space were lower as the sector underperformed the broader market. Verizon (VZ 44.53, -1.05) and AT&T (T 37.26, -0.89) both slid near 2.3%. The two telecom giants saw relative weakness after Stifel Nicolaus downgraded both stocks from 'buy' to 'hold.' With the majority of the sector sliding, Sprint (S 5.26, +0.06) and MetroPCS (PCS 10.63, +0.15) were able to buck the trend and post respective gains of 1.2% and 1.4%.

AK Steel (AKS 5.87, -0.57) slumped 8.9% after lowering its third quarter guidance on expectations of a 7% quarterly decrease in the price of steel. Following the announcement, AK Steel was downgraded by Credit Agricole. Other steelmakers continued to rally along with producers of basic materials. Steel Dynamics (STLD 13.01, +0.61) added 4.9%, while Cliffs Natural Resources (CLF 45.55, +2.37) advanced 5.5%.

Office supply retailer OfficeMax (OMX 8.15, +1.04) surged 14.6%. Earlier, the company confirmed it would extinguish a non-recourse liability which is related to Lehman-backed timber notes. Because of this, OMX will recognize a non-cash, pre-tax gain of $671.1 million in the third quarter. Today's buying lifted the stock to a 21.2% gain on the week. Meanwhile, peer Staples (SPLS 12.21, +0.25) advanced 2.1% following recent rumors of a possible private equity buyout.

Western Digital (WDC 41.06, -1.51) fell 3.6% after lowering its revenue guidance for the first quarter. Shares of the hard drive producer have been in a downtrend since the stock reached a 2-year high at $45.48 on August 17.

Social media stocks were on the rise. Facebook (FB 22.00, +1.28) jumped 6.2% following reports which suggested the company is set to introduce a real-time ad program. FB's peer Zynga (ZNGA 3.18, +0.22) surged 7.4% after the company hired an online-gambling executive, Maytal Olsha as its new Chief Operating Officer. Elsewhere, Groupon (GRPN 5.27, +0.51) soared 10.7% as the stock of the online deals site continues rebounding after reaching an all-time low of $4.00 on September 4.

A slew of economic data points hit the wires today.

Consumer prices increased by 0.6% during August, which was in-line with the 0.6% gain that had been generally expected. Core prices increased by 0.1%, which was slightly short of the 0.2% increase expected by economists polled by Briefing.com.

Separately, retail sales rose during August by 0.9%, which was better than the 0.7% increase that had been broadly expected. The prior month's reading was revised down to show an increase of 0.6%. Excluding autos, retail sales rose by 0.8%, which was in-line with the Briefing.com consensus call.

Industrial production decreased during August by 1.2%, which was worse than the 0.2% decrease that had been widely expected. The reading followed the revised 0.5% increase experienced in the prior month. Capacity utilization hit 78.2%, which was worse than the 79.2% that had been expected and down from the revised prior month reading of 79.2%.

The preliminary University of Michigan Survey for September came in at 79.2, which was ahead of the prior month's 74.3, and better than the reading of 73.5 that had been widely expected.

Lastly, monthly business inventory data for July showed an inventory build of 0.8% for the month which was slightly above the 0.4% that had been expected.

All comments contained herein are for informational purposes only, and should not be considered as a solicitation to buy or sell any security. The firm does not guarantee the accuracy or completeness of the information or make any warranties regarding results from it's usage.