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Leigh Baldwin & Co.

112 Albany Street, Cazenovia, NY 13035 | Phone: (315) 655-2964 Toll Free: 1-800-659-8044

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Day Traders Diary

1/8/13

The S&P 500 ended lower by 0.3% after spending the duration of the session in the red. With little economic data of note and below-average volume, the key indices traded in range bound fashion ahead Alcoa's (AA 9.10, 0.00) earnings report, which will kick-off the fourth quarter earnings season.

Consumer discretionary stocks were in focus after Yum! Brands (YUM 65.04, -2.85) reaffirmed its full-year 2012 earnings guidance, but lowered the same-store sales estimates for its China division. As a result of the disappointing outlook, Yum! Brands slid 4.2% and other quick service restaurants traded lower as well. Darden Restaurants (DRI 45.31, -0.23) and Wendy's (WEN 4.74, -0.05) both shed near 0.7%.

Elsewhere in the discretionary sector, Signet Jewelers (SIG 58.70, +4.87) surged 9.1% after the company guided its fourth quarter earnings near the high end of its prior range. In addition, Signet reported a 3.3% increase in holiday sales. Other high-end retailers saw strength as well. Coach (COH 57.33, +1.70) and Zale (ZLC 4.26, +0.08) settled higher by 3.1% and 1.9% respectively.

Also of note, GameStop (GME 23.19, -1.56) fell 6.3% after the company reported disappointing holiday sales. The company expects its fourth quarter earnings per share to be at the low end of its current guidance range. Video game publishers Electronic Arts (EA 13.77, -0.68) and Take-Two Interactive (TTWO 11.78, -0.36) were pressured by the news, and ended lower by 4.7% and 3.1% respectively.

The materials sector advanced as the space resisted the broad market pressure. The sector was supported by Monsanto (MON 98.50, +2.56), which reported upbeat quarterly result this morning. During the first quarter, the chemical producer earned $0.62, which was well ahead of the $0.26 expected by the Capital IQ consensus. In addition, Monsanto's revenue of $2.94 billion was also ahead of expectations.

The Dow Jones Transportation Average slipped 0.4%. Airlines have shown notable strength since the start of December, but major carriers saw mixed performance after Deutsche Bank changed its rating on two carriers. Southwest Airlines (LUV 11.03, +0.12) was a bright spot, gaining 1.1% after being upgraded to 'Buy' from 'Hold.' On the downside, JetBlue Airways (JBLU 5.94, -0.03) shed 0.5% after the stock was downgraded to 'Hold' from 'Buy.'

Additionally, afternoon reports have indicated an international Japan Airlines flight was forced to return to its gate at Boston Logan International Airport due to a fuel leak. This marks the second time in two days that a Boeing (BA 74.13, -2.00) Dreamliner jet has suffered structural issues. As a result, Boeing lost 2.6%, and settled near its session low.

The telecom sector was the biggest laggard and the iShares Dow Jones US Telecom (IYZ 24.55, -0.38) lost 1.5%. Major carriers AT&T (T 34.35, -0.59) and Verizon Communications (VZ 43.10, -1.07) saw respective losses of 1.7% and 2.4%. The sector underperformed notably despite AT&T reporting having sold over 10 million smartphones during the fourth quarter of 2012. In addition, earlier reports have suggested Verizon Communications may purchase Vodafone's stake in Verizon Wireless. Shares of Vodafone, listed on the FTSE, gained 1.7% in response to the buyout speculation.

According to the Federal Reserve, consumer credit increased by $16 billion in November. This follows the prior month's $14.2 billion increase, and is higher than the $10.6 billion that had been broadly expected among economists polled by Briefing.com.

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