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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

10/3/12

Equities got off to a slow start as the major averages showed indecision in the early going. After chopping around the flat line during the first hour of trade, the key indices reached their session highs at the midway point. Unable to hold those levels, stocks returned to the middle of the day's range before buyers re-emerged in the final hour. As a result, the S&P 500 added 0.4%.

The consumer discretionary sector led the way as a handful of names outperformed. Family Dollar (FDO 68.56, +2.56) gained 3.9% after reporting in-line earnings and revenues. The management also issued mixed guidance as it sees weaker first quarter results and full-year earnings which are expected to be in-line with estimates.

Online video rental service Netflix (NFLX 62.58, +6.12) jumped 10.8% after Citigroup pointed to a survey which showed an improvement in customer satisfaction.

Elsewhere, DineEquity (DIN 58.40, +1.87) rose by 3.3% after Janney Montgomery Scott upgraded the shares of the restaurant operator from 'neutral' to 'buy.'

Homebuilder stocks showed broad strength as the SPDR S&P Homebuilders ETF (XHB 25.38, +0.55) settled higher by 2.2%. Within the group, Standard Pacific (SPF 7.17, +0.60) was the top performer as shares of the homebuilder spiked 9.1%.

The Dow Jones Transportation Average added 1.2% as the vast majority of its components displayed strength. Railroads, CSX (CSX 21.18, +0.48) and Norfolk Southern (NSC 65.60, +0.58) advanced 2.3% and 0.9% respectively after Lazard upgraded the two stocks from 'underperform' to 'market perform.'

Airline stocks were broadly higher after a handful of carriers reported positive monthly metrics. In addition, significant weakness in crude oil may have contributed to airline strength. United Continental (UAL 21.14, +1.20) jumped 6.0%, while Delta Airlines (DAL 10.16, +0.39) and Southwest Airlines (LUV 9.14, +0.16) gained 4.0% and 1.8%, respectively.

The financial sector outperformed the broader market, and the SPDR Financial Select Sector ETF (XLF 15.83, +0.14) settled higher by 0.9%. Bank of America (BAC 9.11, +0.18), Citigroup (C 34.06, +0.80), and Wells Fargo (WFC 35.44, +0.62) were the top performing majors as they registered gains between 1.8% and 2.4%.

Elsewhere, Ocwen Financial (OCN 34.88, +5.92) spiked 20.4% after the company announced the acquisition of Homeward Residential from WL Ross & Company for $588 million in cash and $162 million in convertible preferred stock.

MetroPCS (PCS 12.24, -1.33) fell 9.8% after the company confirmed its merger with T-Mobile USA. In addition, PCS announced the plans for a 1-for-2 reverse stock split. Prior to the reverse split, the company will make a cash payment of $1.5 billionor $4.09 per shareto its shareholders.

Sarepta Therapeutics (SRPT 44.93, +29.94) soared 199.7% after announcing its eteplirsen met the primary endpoints of a trial while achieving significant clinical benefit on a 6-minute walk test. The positive results came after 48 weeks of treatment in phase IIb study focused on patients with duchenne muscular dystrophy.

Crude oil extended yesterday's losses despite inventory data that showed a draw of 0.482 million barrels when a build of 1.5 million was anticipated. Although there wasn't any one item to point to for the weakness, contributing factors included a stronger dollar, reports about the highest crude output levels since December of 1996, and weak economic reports out of Europe and China which signaled demand concerns. The energy component fell off its session high of $90.67 per barrel, and brushed a session low of $87.96 moments before it settled with a 4.0% loss at $88.20.

The September ISM Non-manufacturing Index was reported at 55.1, which was above the 53.0 Briefing.com consensus, and up from August's 53.7 reading.

According to today's ADP National Employment Report, employment in the nonfarm private business sector rose by 162K in September. This was above the 133K increase expected by Briefing.com consensus. In addition, the prior month's increase was revised down by 17k, to reflect an addition of 156k jobs.

In tomorrow's economic releases, Challenger Job Cuts will be reported at 7:30 ET. Initial and continuing claims will hit the wires at 8:30 ET, while factory orders will be released at 10:00 ET. In addition, the Federal Reserve will release the minutes from its September 12 Federal Open Market Committee meeting. Also of note, retailers will release their monthly comparable store sales reports.

Overseas, the Bank of England and the European Central Bank will hold policy meetings.

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.