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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

11/1/12

Stocks began the day with a bullish sentiment as the three major averages spent the first 90 minutes on a steady upward climb. After reaching session highs, the S&P 500 leveled off and held its gains into the afternoon before ending with a gain of 1.1%.

The technology sector was one of the top performers, and the SPDR Technology Select Sector ETF (XLK 29.34, +0.46) settled higher by 1.6%. However, the biggest tech component, Apple (AAPL 596.53, +1.21), underperformed with a gain of just 0.2%.

In notable tech earnings, Visa (V 143.88, +5.12) advanced 3.7% after beating on the top and bottom lines. The payment processor earned $1.54, which was $0.04 better than the Capital IQ consensus estimate. Visa's revenue of $2.73 billion represents a 14.6% year-over-year increase, and was reported ahead of expectations. In addition, the company announced a new $1.5 billion repurchase program.

Elsewhere, JDA Software (JDAS 44.76, +6.61) surged 17.3% after announcing plans to merge with RedPrairie. Per the agreement, JDA stockholders will receive $45 per share, which represents a 33.0% premium to JDA's closing price on October 26. This was the day before speculation regarding a sale started circulating. In addition, JDA reported third quarter earnings of $0.53 on $164.5 million in revenue. The earnings may not be comparable to the Capital IQ analyst estimate of $0.54, while the company's revenue fell short of expectations.

In other M&A news, auto parts manufacturer, Williams Controls (WMCO 15.36, +4.45), soared 40.8% after agreeing to be acquired by Curtis-Wright (CW 31.50, +0.63). Per the agreement, Williams Controls stockholders will receive $15.42 per share, which represents a 41.3% premium to WMCO's Wednesday closing price.

Also of note, Advance Auto Parts (AAP 81.00, +10.06) spiked 14.2% after CNBC reported the company has hired Blackstone to explore a sale. The total price tag may be over $6 billion, which would equate to about $82 per share. Peers Autozone (AZO 380.34, +5.34), O'Reilly Automotive (ORLY 88.05, +2.20), and Pep Boys (PBY 10.47, +0.48) all moved higher on the news.

As the new month begins, retailers are reporting their October same store sales. Out of the eighteen companies which already reported, twelve beat consensus estimates while six missed. However, half of the names which missed reported upside third quarter guidance.

Among the names which exceeded expectations, Bon-Ton Stores (BONT 13.49, +1.23) led the group higher with a gain of 10.0%. Meanwhile, Costco (COST 97.13, -1.30) and Stein Mart (SMRT 7.52, -0.34) saw respective losses of 1.3% and 4.3% despite reporting sales ahead of expectations.

On the downside, Zumies (ZUMZ 21.13, -4.19) slid 16.6% after reporting a 0.6% increase in same store sales. The reading was a disappointment as the Retail Metrics consensus expected the company to post a 4.4% increase. The company pointed to Europe as the reason for anemic growth, and issued downside guidance. Following the news, Piper Jaffray downgraded the stock to 'underweight' from 'neutral.'

Looking at automakers which reported their sales, Ford Motor (F 11.25, +0.09) gained 0.8% after reporting October sales of 168,456 vehicles. The figure represents a 0.4% year-over-year growth.

Toyota Motor (TM 78.05, +0.58) added 0.8% after reporting monthly sales of 155,242, which is a 15.8% increase on a daily selling rate basis and on an unadjusted raw volume basis. Also of note, a story out of Reuters indicated the company's October sales in China fell by 44.0%.

Honda Motor (HMC 30.35, +0.19) advanced 0.6% after its October sales increased by 8.8% year-over-year, to 106,973 units.

A number of economic data points came through today and most figures were largely in-line with expectations. The October Challenger Job Cuts report showed a 12.0% year-over-year increase. This follows the prior reading which indicated a 70.8% decline.

According to today's ADP National Employment Report, employment in the nonfarm private business sector rose by 158K in October. This was above the 143K increase expected by Briefing.com consensus.

The latest weekly initial jobless claims count totaled 363,000, which was lower than the 375,000 that had been expected by the Briefing.com consensus. The tally was below the revised prior week count of 372,000. As for continuing claims, they rose to 3.263 million from 3.254 million.

The consumer confidence reading for October came in at 72.2 while economists polled by Briefing.com expected a reading of 72.0. This follows prior month's 70.3 print.

The October ISM Index came in better-than-expected at 51.7 versus the 51.0 Briefing.com consensus, and up from September's reading of 51.5. Meanwhile, September construction spending rose by 0.6% month-over-month, against the expected increase of 0.8%.

Lastly, third quarter unit labor costs decreased by 0.1% which was lower than the 1.4% rise that had been widely anticipated. During the same period, productivity increased by 1.9%, according to the preliminary reading. An increase of 1.6% had been broadly forecast.

Tomorrow's economic data will focus on jobs as October nonfarm payrolls, nonfarm private payrolls, the unemployment rate, hourly earnings, and average workweek will all be announced at 8:30 ET. In addition, September factory orders will be reported at 10:00 ET.

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.