Day Traders Diary
9/27/12Equities got off to a strong start despite a string of negative economic data. The third estimate of second quarter GDP indicated growth of 1.3% which was well below the prior reading of 1.7%. Elsewhere, durable goods orders also showed notable weakness as new orders declined by 13.2% during August. Excluding transportation related items, durable goods orders decreased by 1.6%. Weekly initial claims were the sole bright spot as the reading of 359k was below the broadly-anticipated 379k. The major averages extended their gains after Spain announced its 2013 budget which included spending cuts and no tax hikes. The key averages continued rallying throughout the afternoon and the S&P 500 settled higher by 1.0%.
Technology stocks outperformed the broader market. Within the group, Apple (AAPL 681.32, +16.14) started in the red, but ended higher by 2.4%.
Among semiconductor producers, AMD (AMD 3.43, +0.11) gained 3.3% as it rebounded from recent weakness. Meanwhile, NXP Semiconductors (NXPI 25.37, +1.61) rose by 6.8% after positive comments about the company were made at JPMorgan.
Two tech stocks headed in opposite directions after reporting their earnings. Progress Software (PRGS 21.23, +2.07) spiked 10.8% after announcing an earnings beat and a revenue miss.
On the downside, Comtech (CMTL 27.43, -0.95) slid 3.4% despite beating on earnings and revenues. In addition, the company issued full-year 2013 guidance which was in-line with analyst expectations.
OCZ Technology (OCZ 3.41, +0.08) added 2.4% after reports indicated the company held talks with Seagate (STX 31.93, +0.95) regarding a possible acquisition. However, the talks fell apart after OCZ's Chief Executive Officer requested a seat on Seagate's board of directors as part of the merger.
Financials also outperformed as the SPDR Financial Select Sector ETF (XLF 15.64, +0.14) rose by 0.9%. Morgan Stanley (MS 16.84, +0.41) and Bank of America (BAC 8.97, +0.15) posted the largest advances among the majors. The two listings finished higher by 2.5% and 1.8%, respectively.
Meanwhile, Discover (DFS 39.70, +2.68) surged 7.2% after reporting earnings and revenues ahead of expectations.
The health care sector trailed the broader market as a handful of names moved on news. Peregrine Pharma (PPHM 1.11, -0.55) fell 33.1% after disclosing it received a written notice of default from one of its lenders due to the recent discovery of a major discrepancy in treatment group coding for one of its clinical trials. Peregrine complied with the request and issued full payment on September 25, 2012.
On the upside, Achillion Pharma (ACHN 10.29, +0.80) gained 8.5% after providing positive proof-of-concept data with ACH-3102.
The Dow Jones Transportation Average traded in-line with the Dow Industrials. Railroad and shipping stocks showed strength within the 20-stock group. Kansas City Southern (KSU 76.96, +1.60) was the top performing railroad as it gained 2.1%. Meanwhile, Overseas Shipholding Group (OSG 7.05, +0.34) and Expeditors International (EXPD 36.81, +0.79) advanced 5.1% and 2.2%, respectively.
Airline stocks were generally lower after United Continental (UAL 19.36, -0.80) updated its third quarter guidance. UAL slipped 4.0% after reporting that it expects third quarter capacity to be lower by 1.4%, while passenger unit revenues are expected to be down between 1.0% and 2.0%. United Continental peers traded lower on related weakness. JetBlue (JBLU 4.84, -0.06) and Southwest (LUV 8.88, -0.04) lost 1.2% and 0.5%, respectively.
In tomorrow's economic data, personal income, personal spending, and core PCE prices will be released at 8:30 ET. In addition, Chicago PMI will be reported at 9:45 ET while the Final Michigan Sentiment will cross the wires at 9:55 ET.
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