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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

10/5/12

Equities began the day on a higher note despite mixed jobs data. After reaching session highs within the first hour, the major averages reversed and spent the remainder of the day sliding towards the unchanged level. As a result, the S&P 500 ended flat while the Dow advanced 0.3% to close at its best level in five years.

Nonfarm payrolls were reported at 114K versus the 120K Briefing.com consensus. The prior reading was revised up to 142K from 96K. Meanwhile, nonfarm private payrolls added 104K against the 130K consensus. The unemployment rate was reported at 7.8% versus the 8.1% consensus.

In addition, hourly earnings increased by 0.3% while the expectations called for an uptick of 0.2%. Lastly, average workweek ticked up to 34.5 from 34.4.

The materials sector led the way. Within the group, steel producers outperformed. AK Steel (AKS 4.87, +0.05) and Steel Dynamics (STLD 11.91, +0.18) added 1.0% and 1.5%, respectively.

Telecom stocks were the biggest laggard. However, the underperformance was due to notable weakness in a single stock. Inteliquent (IQNT 7.70, -1.36) fell 15.0% after Robert W. Baird downgraded the stock from 'outperform' to 'neutral' and lowered its price target from $15 to $10. Originally, Robert W. Baird upgraded the stock in the spring on the expectation of a financial engineering catalyst. Although that catalyst was achieved, the firm says results have unfortunately deteriorated more than expected and there now appears to be increased material risk to forward estimates.

Other telecom names were generally higher and the iShares Dow Jones US Telecom ETF (IYZ 25.76, +0.16) added 0.6%. Two sector components which have been in the headlines recently showed gains. Leap Wireless (LEAP 6.18, +0.33) and Sprint (S 5.20, +0.11) gained between 2.2% and 5.6%. Earlier, reports suggested that Sprint plans on holding a second meeting to discuss a possible offer for MetroPCS (PCS 12.65, -0.04).

The Dow Jones Transportation Average continued its recent streak of outperformance and settled higher by 0.7%. Within the bellwether complex, 16 out of 20 stocks advanced and trucking stocks were the top performers. Con-Way (CNW 27.98, +0.27), CH Robinson (CHRW 60.31, +0.41), JB Hunt (JBHT 55.20, +0.94), and Landstar (LSTR 48.96, +0.58) all posted gains between 0.7% and 1.7%.

Southwest Airlines (LUV 8.97, -0.13) was the main decliner among transportation stocks, down 1.4%.

Despite weakness in Southwest, other air carriers outperformed. China Eastern Airlines (CEA 16.08, +0.28) advanced 1.8% while United Airlines (UAL 21.07, +0.26) added 1.3%.

Solar stocks were under pressure after Avian Securities downgraded First Solar (FSLR 20.07, -2.48) from 'positive' to 'negative.' The downgrade results from reliability issues related to the junction box on modules supplied by First Solar. The company commented on the issue by saying approximately 232,000 modules may develop loose cord plates over time, but the issue is not expected to have a material impact on earnings. As a result, FSLR slid 11.0%.

Other solar stocks also showed weakness as the Guggenheim Solar ETF (TAN 16.52, -0.49) settled lower by 2.9%.

Consumer credit increased by $18.1 billion in August. This follows prior month's reading of a $3.3 billion decrease, and is higher than the $5.0 billion that had been broadly expected among economists polled by Briefing.com.

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.