Day Traders Diary


Equities began the day firmly higher before surrendering a portion of their early gains. The S&P 500 marked its session high in the 1469 area during the initial minutes, and followed the upbeat open with a slide back to its flat-line. The index has since returned to the middle of its range, and it trades higher by 0.4% at midday.

The financial sector is leading the broader market as the SPDR Financial Select Sector ETF (XLF 17.08, +0.15) trades higher by 0.9%. The financial sector proxy ETF remains near its 52-week high with most majors scheduled to announce their fourth quarter earnings next week. Tomorrow morning, Wells Fargo (WFC 35.02, +0.31) will be the first notable sector component to report. The Capital IQ consensus expects the bank to reveal earnings of $0.89 on $21.26 billion in revenue. An in-line report would indicate healthy year-over-year bottom line growth of nearly 22.0%. Looking at other majors, Bank of America (BAC 11.70, +0.27) is higher by 2.4% and JPMorgan Chase (JPM 45.92, +0.45) is adding 1.0%.

The technology sector is the only space trading in the red. Looking at notable movers, Apple (AAPL 515.82, -1.28) saw early strength, but is now off by 0.3%. The early strength followed reports from Reuters which indicated the company's Chief Executive Officer Tim Cook met with the chairman of China Mobile (CHL 58.33, +1.03) to talk about "matters of cooperation." China Mobile, which has over 700 million subscribers, does not currently offer Apple products on its network.

In earnings, DragonWave (DRWI 2.75, -0.67) is plunging 19.6% after missing on earnings. In addition, the company issued downside fourth quarter guidance.

Among names reacting to analyst comments, Microsoft (MSFT 26.30, -0.40) is down 1.5% after Morgan Stanley downgraded the stock to 'Equal-Weight' from 'Overweight.'

Retailers are lagging the broader market, and the SPDR S&P Retail ETF (XRT 62.76, -0.26) is down 0.4%. Earlier, Aeropostale (ARO 12.86, -0.50) issued downside earnings guidance due to disappointing holiday sales. Aeropostale is down 3.8% and peer American Eagle Outfitters (AEO 19.72, -0.91) trades lower by 4.4%.

Elsewhere, Tiffany (TIF 60.57, -2.69) is slumping 4.3% after the jewelry retailer said it expects its fourth quarter earnings to be near the low end of its prior guidance range. Peers Blue Nile (NILE 36.55, -0.60) and Coach (COH 56.97, -0.99) are both down near 1.5%.

The latest weekly initial jobless claims count totaled 371,000, which was worse than the 364,000 that had been expected by the consensus. The tally was above the revised prior week count of 367,000. As for continuing claims, they fell to 3.109 million from 3.236 million.

The European markets ended the day on a mixed note. France's CAC lost 0.4%, Germany's DAX lost 0.2%, and the United Kingdom's FTSE added 0.1%.

In France, the newest index component, Gemalto, was the weakest performer and lost 4.6%. On the upside, Credit Agricole and Societe Generale both gained near 2.0%.

Germany's DAX was pressured by defensive stocks. Fresenius Medical and parent company Fresenius SE saw respective losses of 2.5% and 1.9% after Credit Suisse downgraded Fresenius Medical to 'Neutral.' The rating cut resulted from the expectation that U.S. healthcare cost cuts may negatively impact earnings.

In the United Kingdom, distributor Bunzl advanced 3.4% after announcing three acquisitions. Consumer stocks were among the laggards and Tate & Lyle lost 1.3%.

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