Day Traders Diary


Equities showed indecision in the early going as trade hovered around the flat line for the first 90 minutes before the S&P 500 slid to a session low near 1350. The level provided some support for the benchmark index which managed to cross into positive territory before sellers retook control and drove it back down to session lows. However, the average received a considerable bid in the final minutes of the session and ended with a loss of 0.2%.

Financial stocks felt the brunt of yesterday's sell-off. As the nation's leaders discuss ways to avoid falling off the fiscal cliff, bank stocks will be especially sensitive to hints of a possible agreement. Today, major financials saw gains. Bank of America (BAC 9.09, +0.10), Citigroup (C 35.21, +0.19), and Morgan Stanley (MS 16.26, +0.17) advanced between 0.5% and 1.1%.

Looking at technology bellwethers, Apple (AAPL 525.62, -11.26) slid 2.1% to extend its recent slide. Since its September highs, the stock has lost over 25% in value as it searches for its next level of support. Meanwhile, Intel (INTC 20.03, +0.07) advanced 0.4% to snap its nine-day losing streak. The stock has lost nearly 10% since the start of November.

Networking companies continued seeing strong earnings. Yesterday, Cisco Systems (CSCO 17.94, +0.28) rallied after its quarterly report. Today, NetApp (NTAP 30.20, +3.07) surged 11.4% after beating on the bottom line. The networking company exceeded earnings expectations by $0.03 and reported in-line revenue. Following the report, Raymond James upgraded shares of NetApp to 'outperform' from 'market perform.'

In other earnings news, Wal-Mart (WMT 68.72, -2.59) reported third quarter earnings of $1.08 on $113.93 billion in revenue. The retail giant's bottom line beat the Capital IQ consensus estimate by $0.01, while the revenue missed expectations. The company's guidance was mostly in-line as it expects fourth quarter earnings between $1.53 and $1.58. Wal-Mart lost 3.6% in response to this morning's results while peer, Target (TGT 62.44, +1.06), gained 1.7% after its in-line quarter.

Stocks in the materials space traded largely in-line with the broader market. However, weakness among steel producers weighed on the sector. AK Steel (AKS 3.63, -0.39) fell 9.7% after the company announced the pricing of $500 million in senior notes set to mature in 2018 and 2019. In addition, AK Steel priced 22 million shares of common stock at a public offering price of $4.00 per share. Looking at other steelmakers, Steel Dynamics (STLD 12.29, -0.42) and Reliance Steel (RS 53.71, -0.79) settled lower by 3.3% and 1.5%, respectively.

The Dow Jones Transportation Average traded in-line with the remaining industrials. The bellwether complex shed 0.2% as 12 out of the 20 transportation stocks saw losses. This morning, United Continental (UAL 19.51, -0.47) experienced technical difficulties which resulted in some flight delays. United lost 2.4%, while rivals Alaska Air (ALK 40.88, +0.36), JetBlue Airways (JBLU 5.03, +0.05), and Southwest Airlines (LUV 8.84, +0.08) all gained between 0.9% and 1.1%. Airline stocks displayed relative strength after yesterday's sell-off weighed on the group and caused Delta and JetBlue to lose near 6.0% each.

A number of economic data points were reported today. Most notably, the Philadelphia Fed Survey slipped to -10.7 for November. This follows October's reading of -1.9 while economists polled by had expected that the Survey would improve to a reading of 0.0.

The latest weekly initial jobless claims count totaled 439,000, which was higher than the 388,000 that had been expected by the consensus. The tally was ahead of the revised prior week count of 361,000. As for continuing claims, they rose to 3.334 million from 3.163 million.

October consumer prices increased by 0.1%, which was in-line with the consensus forecast of a 0.1% increase. Today's reading follows prior month's 0.6% increase. In addition, core prices rose by 0.2% which was slightly hotter than the generally expected increase of 0.1%.

Separately, the Empire Manufacturing Survey for November registered a reading of -5.2, which was up from the prior month's reading of -6.2. Economists polled by had expected that the Survey would slip to -8.5.

Tomorrow, September net long-term TIC flows will be reported at 9:00 ET. In addition, October industrial production and capacity utilization will both be announced at 9:15 ET. Also note that November options are set to expire tomorrow.
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