Day Traders Diary


The major averages finished today's session on a positive note despite early weakness in the S&P 500. Today's focus centered on earnings as technology heavyweights Google (GOOG 741.50, +38.63) and International Business Machines (IBM 204.72, +8.64) reported fourth quarter results which were received warmly by the market.

Both companies beat their respective Capital IQ earnings expectations, while revenues proved to be more of a mixed bag. Google's top line of $12.16 billion represented nearly 50.0% year-over-year growth, but the figure fell short of analyst expectations. Meanwhile, IBM's revenue slipped 0.6% year-over-year to $29.30 billion.

Google and IBM saw respective gains of 5.5% and 4.4%, and their strength resulted in a notable divergence in the major averages. It should be noted that IBM accounts for more than 10.0% of the price-weighted Dow Jones Industrial Average due to its high stock price. This caused the 30-stock average to trade near its session high for the duration of the day.

Elsewhere, the Nasdaq spent the entire session in a ten point range as positive tech earnings contributed to the relative strength. Also of note, Apple (AAPL 514.00, +9.24) gained 1.8% prior to reporting its quarterly earnings after the closing bell.

The S&P 500 was the last index to cross into the black. After making several morning attempts, the benchmark average turned positive in afternoon trade in a move which coincided with the successful passage of the "No Budget, No Pay" bill in the House of Representatives. The measure, which is aimed at extending the debt ceiling until May 19, comes with a caveat stipulating congressional pay will be suspended if no budget deal is reached by April 15.

While technology stocks were the clear leaders today, steel producers lagged as the Market Vectors Steel ETF (SLX 49.33, -0.44) ended lower by 0.9%.

Apparel producers were also among the underperformers after Coach (COH 50.75, -9.93) missed on earnings and revenue. In addition, the retailer said its North American comparable store sales fell short of estimates. The stock tumbled 16.4% and peer Fossil (FOSL 103.49, -2.46) was hit hard, falling 2.3%.

Crude oil traded with slim losses for the majority of the session before selling off into the close. The weakness caused the energy component to slip 1.1% and settle at $95.60.

Today's economic data focused on housing. The weekly MBA Mortgage Index pointed to a 7.0% increase in new mortgage applications. This follows the prior week's increase of 15.2% Elsewhere, the November FHFA Housing Price Index rose by 0.6% to follow the prior month's uptick of 0.5%.

Tomorrow, weekly initial and continuing claims will both be reported at 8:30 ET. In addition, December leading indicators will be released at 10:00 ET.

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