Day Traders Diary


Today's session began on a lower note after pre-market weakness in Apple (AAPL 501.75, -18.55) weighed on the tech-heavy Nasdaq. Meanwhile, the S&P 500 marked its session low in the 1465 area an hour into the session. The benchmark index then reversed and spent the remainder of the session climbing back near its flat line before finishing with a slim loss.

Apple lost 3.6% after being down as much as 4.5% during pre-market trade. The underperformance followed reports from the Nikkei and the Wall Street Journal, which indicated the largest tech company has cut its orders for iPhone 5 parts due to sluggish demand. The early selling pushed the stock below $500 for the first time in eleven months. A handful of Apple suppliers were also pressured by the news as Qualcomm (QCOM 64.24, -0.66) and Cirrus Logic (CRUS 28.62, -2.96) lost 1.0% and 9.4% respectively. Note that several analysts have come out in defense of Apple saying the story is not a recent development.

Among other smartphone manufacturers, Research In Motion (RIMM 14.95, +1.39) remained in the spotlight. On Friday, the stock surged over 15.0% after photos of the new Blackberry 10 handset became available on the internet. Today, Research In Motion settled higher by 10.3%, which puts it 27.0% above Friday's opening price.

Telecom stocks lagged the broader market after morning reports hinted at slowing Apple iPhone demand. The three major carriers which offer the device on their networks traded lower in response to the developments. AT&T (T 34.02, -0.25), Sprint Nextel (S 5.69, -0.23), and Verizon Communications (VZ 42.59, -0.71) saw respective losses of 0.7%, 3.9%, and 1.6%. Note that UBS downgraded Sprint and Verizon to 'Neutral.' In addition, JPMorgan Chase also downgraded Sprint to 'Neutral' from 'Overweight.'

Dell (DELL 12.29, +1.41) was on the move today after Bloomberg TV reported the PC maker is in talks with private equity regarding a potential buyout. Dell surged 13.0% on the news, and several related names moved higher as well. Hewlett-Packard (HPQ 16.95, +0.79) and Seagate (STX 33.97, +0.68) saw respective gains of 4.9% and 2.0%.

Discretionary stocks showed relative weakness in early trade, but the sector settled with slim gains. (AMZN 272.73, +4.79) was a notable advancer as the online retailer hit a fresh all-time high of $274.26.

Harry Winston Diamond (HWD 15.08, +0.62) rose by 4.3% after the company agreed to sell its luxury brand diamond jewelry and timepiece division to the Swatch Group for $750 million. In addition, Swatch will assume up to $250 million of pro-forma net debt.

V.F. Corporation (VFC 153.88, +4.88) advanced 3.3% after the company confirmed it has submitted a bid to acquire Billabong International for AUD1.10 per share.

Financials underperformed and the SPDR Financial Select Sector ETF (XLF 17.06, -0.05) slipped 0.3%. The financial sector saw notable gains in recent weeks, but last Friday's earnings report from Wells Fargo (WFC 34.77, -0.33) failed to please investors. Though the bank exceeded analyst expectations on the top and the bottom line, a decrease in net interest margins and mortgage originations weighed. Today, the space traded lower with most majors scheduled to reveal their fourth quarter results this week. Looking at individual components, Bank of America (BAC 11.47, -0.16) and JPMorgan Chase (JPM 45.88, -0.26) lost 1.4% and 0.6% respectively.

Looking at tomorrow's economic data, December retail sales, retail sales ex-auto, PPI, core PPI, and the January Empire Manufacturing Index will all be reported at 8:30 ET. Lastly, November business inventories will be released at 10:00 ET.

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