Day Traders Diary
11/19/12Equities began today's session amid optimism regarding a potential fiscal cliff compromise. In addition, headlines out of Europe indicated the next tranche of Greek aid will likely come through before December 5. The positive sentiment lifted the S&P 500 to its session highs during the opening minutes. The benchmark average maintained these levels throughout the day before seeing a final round of buying which ran it to session highs into the close. Meanwhile, the Nasdaq outperformed with a gain of 2.2%.
The materials sector led the market higher. Within the space, two steel producers saw gains despite receiving downgrades. AK Steel (AKS 3.66, +0.09) rose by 2.5% following Longbow's downgrade to 'neutral' from 'buy.' Meanwhile, Mechel Steel (MTL 6.09, +0.25) advanced 4.3% after Morgan Stanley downgraded the company to 'equal-weight' from 'overweight.'
After seeing considerable pressure during recent market weakness, tech stocks rebounded broadly. The PowerShares QQQ ETF (QQQ 63.78, +1.48) settled higher by 2.4%, after losing more than 10% since September 21. Among technology bellwethers, Apple (AAPL 565.73, +38.05) spiked 7.2% in an attempt to establish support and put a stop to its recent softness.
Also of note, Cisco Systems (CSCO 18.30, +0.31) added 1.7% after announcing its intent to acquire Meraki, a start-up specializing in cloud-networking, for approximately $1.2 billion.
Due to the nature of their business, financials are expected to be highly sensitive to any hints of progress in budget discussions. Today, the SPDR Financial Select Sector ETF (XLF 15.56, +0.28) ended higher by 1.9%. Bank of America (BAC 9.49, +0.37) was the top performer among the majors. The bank shares gained 4.1% after Stifel Nicolaus upgraded the stock to 'buy' from 'hold' with an $11 price target. Elsewhere, Citigroup (C 36.10, +1.12) added 3.2% after earlier reports indicated the company will eliminate about 300 sales and trading jobs. Separately, Citigroup has agreed to pay $360 million over a Lehman Brothers dispute.
The exuberance was apparent in European financials as well. Barclays (BCS 15.85, +0.87) advanced 5.8% after Goldman upgraded the stock to 'buy' from 'neutral.' Meanwhile, Deutsche Bank (DB 43.25, +1.68) and Credit Suisse (CS 22.92, +0.98) saw respective gains of 4.0% and 4.5%.
This morning, October existing home sales were reported at 4.79 million. The number was an improvement from the prior month, and it beat expectations. In addition, the November NAHB Housing Market Index came in at 46, which was also better-than-expected. The SPDR S&P Homebuilders ETF (XHB 25.39, +0.50) rose by 2.0% as the strong data combined with a broad-market rally translated into outperformance by builders. PulteGroup (PHM 16.01, +0.33), and Lennar (LEN 36.81, +0.68) gained 1.4% and 1.9%, respectively.
Additionally, Lowe's (LOW 33.96, +1.98) surged 6.2% after the home improvement store operator reported third quarter earnings of $0.40 on $12.07 billion in revenue. Both figures were ahead of the Capital IQ consensus estimate, and were followed by in-line full-year earnings guidance.
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