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Leigh Baldwin & Co.

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Day Traders Diary

12/18/12

Stocks registered broad gains during today's session as comments from Washington lawmakers indicated the budget debate is intensifying. Though an agreement remains elusive, the markets welcomed the developments and spent the duration of the day in an upward climb. As a result, the S&P 500 advanced 1.2%.

Apple (AAPL 533.90, +15.07), which has been in focus recently, supported the technology sector and finished higher by 2.9%.

The SPDR Financial Select Sector ETF (XLF 16.57, +0.24) gained over 2.0% yesterday, and the financial sector proxy added another 1.5% today. The space was expected to show heightened sensitivity to hints of progress in the budget debate, and today's developments were received positively by the majors. Goldman Sachs (GS 127.77, +4.28) and Morgan Stanley (MS 19.12, +0.59) outperformed their peers as both saw gains over 3.0%.

Energy stocks were supported by strength in crude oil and the SPDR Energy Select Sector ETF (XLE 73.19, +1.32) settled higher by 1.8%. Prior to the open, Baker Hughes Incorporated (BHI 41.93, +1.29) warned that fourth quarter North American revenue and profit margins will likely be lower than previously expected. Baker Hughes was down as much as 2.0% in pre-market trade, but has seen notable strength since. BHI finished with a gain of 3.2% and peers Halliburton (HAL 34.80, +1.26) and Schlumberger (SLB 71.35, +1.67) rallied 3.8% and 2.4%, respectively.

In addition, coal stocks outperformed following comments from the International Energy Agency, which said it expects coal to eclipse oil as world's top energy source around 2017. CONSOL Energy (CNX 34.29, +0.62) and Walter Energy (BTU 27.37, +0.74) both gained near 2.0%.

In M&A news, Arbitron (ARB 47.03, +8.99) surged 23.6% after agreeing to be acquired by Nielsen (NLSN 30.92, +1.30) for $48 per share. The transaction represents a premium of approximately 26% to Arbitron's closing price on December 17, 2012. Nielsen has secured a financing commitment for the total transaction amount, and the transaction has been approved by the boards of both companies.

The NAHB Housing Market Index for December registered a reading of 47. That is up from the prior month's revised reading of 45, and in-line with expectations among economists polled by Briefing.com.

Homebuilders benefitted from today's rally, and the SPDR S&P Homebuilders ETF (XHB 26.89, +0.55) finished higher by 2.1%. The year-long strength in homebuilder stocks has lifted the ETF to its best level since July 2007. Among individual builder stocks, DR Horton (DHI 20.08, +0.39) and PulteGroup (PHM 18.61, +0.57) rose by 2.0% and 3.2%, respectively.

The current account deficit for the third quarter totaled $107.5 billion, which was wider than the $104.2 billion deficit that had been broadly anticipated. This marks an improvement from the second quarter's $118.1 billion deficit.

The major European averages ended the day on a positive note. France's CAC gained 0.3%, United Kingdom's FTSE rose by 0.4%, and Germany's DAX advanced 0.6%.

In France, Alcatel-Lucent (ALU 1.38, +0.06) continued its recent strength. The producer of communication equipment surged 8.3% as it attempts to lift off all-time lows. The recent strength came after the company secured EUR1.6 billion in financing from Credit Suisse and Goldman Sachs. On the downside, carmaker Renault lost 1.9%.

United Kingdom's FTSE was supported by defense stocks as BAE Systems and Rolls-Royce Holdings finished with respective gains of 2.2% and 2.4%. Rolls-Royce outperformed following the announcement of a $1 billion agreement with Japan's Skymark Airlines.

Germany's DAX outperformed the region partly due to strength in financials. Commerzbank gained 3.7% and Deutsche Bank (DB 44.23, +1.12) finished higher by 1.9%. In addition, insurer Muenchener Re rose by 1.7%. Meanwhile, Adidas lost 1.0% and was the biggest decliner.

Tomorrow morning, FedEx (FDX 92.36, +1.34), General Mills (GIS 41.77, +0.04), and Navistar (NAV 22.85, +0.93) are all scheduled to report. Most notably, the Capital IQ consensus expects economic bellwether FedEx to announce earnings of $1.41 on $10.82 billion in revenue.


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.