Day Traders Diary


Equities began today's session on a lower note. However, the major averages followed the lower open with a steady climb towards session highs. The optimism held the S&P 500 near the 1,385 level for the majority of the session, before late day selling pushed it back into the red. As a result the benchmark average settled lower by 0.4%.

Consumer discretionary stocks outperformed after four retailers reported earnings. Michael Kors (KORS 50.98, +0.40) advanced 0.8% after beating on earnings and revenue. The company reported earnings of $0.49, which was $0.09 better than the Capital IQ consensus estimate. Meanwhile, the revenue of $532.9 million was also ahead of expectations. The company's outlook was mixed as it sees full-year 2013 earnings above consensus, while revenue is forecast to fall short of estimates.

Saks (SKS 9.92, +0.04) added 0.4% after reporting earnings of $0.12, which was in-line with the Capital IQ consensus estimate. However, the company's revenue of $713 million missed expectations. Regarding its outlook, the company said it expects fourth quarter comparable store sales to be relatively flat year-over-year.

TJX (TJX 42.06, +1.09) gained 2.7% after beating on the top line, and reporting earnings in-line with expectations. Note that the company issued downside guidance as it expects fourth quarter earnings to fall below analyst expectations.

Home Depot (HD 63.38, +2.22) rose by 3.6% after reporting upbeat earnings. During the third quarter, the home improvement store operator earned $0.74 on $18.13 billion in revenue. Both figures were ahead of the Capital IQ consensus estimate. In addition to reporting strong earnings, Home Depot raised its guidance as it sees an uptick in the housing recovery. While the management expects strong future results, shares of Home Depot have been pricing in the news for quite some time. The stock has added over 52% since the beginning of this year.

The technology sector underperformed the broader market. Semiconductor shares contributed to the weakness as the PHLX Semiconductor Index settled lower by 1.0%.

Elsewhere in technology, Microsoft (MSFT 27.08, -0.90) lost 3.2% after announcing the departure of Windows and Windows Live President Steven Sinofsky. Following Mr. Sinofsky's departure, Julie Larson-Green will be promoted to lead all Windows software and hardware engineering.

In the materials sector, AK Steel (AKS 4.50, -0.96) issued downside fourth quarter guidance. After reducing its earnings expectations for the current quarter, the company expects to report a loss between $0.34 and $0.39. Meanwhile, the Capital IQ consensus called for a loss of $0.19. In addition to the downside guidance, AK Steel announced a registered offering of 25 million shares of its common stock. Also of note, the company has commenced a private offering of $350 million in senior secured notes. Shares of AK Steel slid 17.6% following the news and other steel producers are seeing mixed performance. United States Steel (X 21.31, -0.22) shed 1.0% while Worthington Industries (WOR 21.93, +0.83) advanced 3.9%.

The October Treasury Budget showed a $120 billion deficit, which was wider than the deficit of $113 billion expected by the consensus.

Looking at tomorrow's economic data, the weekly MBA Mortgage Index will be released at 7:00 ET. In addition, October retail sales, retail sales ex-auto, PPI, and core PPI will all be announced at 8:30 ET. Lastly, September business inventories and the Federal Reserve Open Market Committee minutes will hit the wires at 10:00 ET and 14:00 ET, respectively.

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