Day Traders Diary
12/5/12Stocks finished the session on a higher note, but gave up a large portion of their gains in the final half-hour of the session. The major averages showed notable divergence as the Dow led with a gain of 0.6% while Nasdaq lost 0.8%. The tech-heavy index lagged the broader market due to considerable weakness in shares of Apple (AAPL 538.79, -37.05), which fell 6.4% and saw their largest one-day drop in four years. Meanwhile, the S&P 500 held near its session high for the majority of the afternoon before late-day selling trimmed its gain to 0.2%.
Even though Apple lagged significantly, other large cap technology stocks saw narrower losses. Google (GOOG 687.82, -3.21) slipped 0.5% and International Business Machines (IBM 188.65, -0.71) shed 0.4%.
Elsewhere in tech, Pandora Media (P 7.80, -1.65) plunged 17.5% after reporting its earnings. Although the internet radio operator beat on earnings and revenue, the company guided fourth quarter top and bottom lines below consensus. In addition, the company said its November 2012 audience has increased 58% year-over-year.
Nokia (NOK 3.88, +0.44) surged 12.8% after the smartphone maker signed an agreement with China Mobile to sell its Widows-based Lumia 920 device.
Financials led the broader market and the SPDR Financial Select Sector ETF (XLF 15.85, +0.19) advanced 1.2%. Citigroup (C 36.46, +2.17) rallied 6.3% after the company announced plans to reduce expenses and improve efficiency. As part of the plan, Citigroup will dismiss more than 11,000 employees. In addition, the 2012 pre-tax charges are expected to total $1 billion. Looking at other majors, Bank of America (BAC 10.46, +0.63) advanced 5.7% and JPMorgan Chase (JPM 41.20, +0.63) added 1.6%.
Last evening, the Wall Street Journal reflected on the ongoing build-up in car dealer inventories. The article also pointed to large incentives offered by automakers in order to provide relief to inventories and entice new customers. General Motors (GM 25.00, -0.41) has been a notable standout among those offering cash discounts. The company has attempted to jump-start sales by offering between $2,900 and $3,500 in incentives. Automakers and auto parts store operators underperformed today. General Motors shed 1.6% while AutoZone (AZO 360.27, -6.53) and Pep Boys (PBY 9.48, -0.09) lost near 1.5% each.
Homebuilders were broadly weaker and the SPDR S&P Homebuilders ETF (XHB 25.65, -0.64) shed 2.4%. As a result of the industry-wide weakness, major builders lost in excess of 2.0%. PulteGroup (PHM 16.20, -0.89) and Lennar (LEN 36.42, -1.36) saw respective losses of 5.2% and 3.6%. In addition to individual builders, home improvement stocks also underperformed. Whirlpool (WHR 98.62, -1.80) settled lower by 1.8% and Leggett & Platt (LEG 27.17, -0.68) slid 2.4%.
In M&A news, Freeport McMoRan (FCX 32.16, -6.12) slumped 16.0% after the company confirmed it will acquire Plains Exploration & Production (PXP 44.50, +8.45) and McMoRan Exploration (MMR 15.82, +7.36) in transactions totaling $20 billion.
Looking at today's economic data, the weekly MBA Mortgage Index pointed to a 4.5% rise in new mortgage applications during the past week. Today's reading followed prior week's decline of 0.9%.
According to today's ADP National Employment Report, employment in the nonfarm private business sector rose by 118K in November. This was above the 125K increase expected by the Briefing.com consensus.
Productivity data for the third quarter showed an increase of 2.9%, which was better than the 1.9% increase that had been reported in the preliminary reading. It was also better than the 2.7% increase that had been broadly expected. Unit labor costs for the third quarter were revised lower to reflect a 1.9% decrease after they had reportedly slipped 0.1% in the preliminary reading. Economists polled by Briefing.com had expected that unit labor costs would tick down in the revised reading to reflect a decrease of 0.8%.
October factory orders showed an increase of 0.8%, which was better than the Briefing.com consensus of a 0.1% decrease. Today's reading follows last month's 4.8% increase.
The November ISM Services Index was reported at 54.7, which is ahead of the 53.7 forecast by the Briefing.com consensus, and down from October's reading of 54.2.
Tomorrow's economic data will focus on jobs as November Challenger Job Cuts will be reported at 7:30 ET while weekly initial and continuing claims will be announced at 8:30 ET.
In addition, the Bank of England and European Central Bank will both announce rate decisions.
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