Day Traders Diary


Equities ended little changed after spending the vast majority of today's session in the red. The major averages began the day on a cautious note as European indices retreated in anticipation of an update from Monte dei Paschi regarding the size of derivative-related losses suffered by the world's oldest bank. Recent reports have suggested the bank's losses will exceed the original estimate of EUR720 million. This caused selling of the Italian 10-yr as its yield climbed 13 basis points to 4.58%, its worst level since mid-December 2012.

The S&P 500 staged a morning recovery with the help of Apple (AAPL 457.35, -0.49). The largest tech stock spiked off its lows after rumors suggested the company may raise its quarterly dividend. However, with little substance behind the speculation, Apple followed the jump with a steady slide back near its flat line.

While tech shares displayed intraday strength, the discretionary sector hovered in the black throughout the session. Upbeat earnings from Polo Ralph Lauren (RL 174.63, +9.72) as well as Times Warner (TWX 52.01, +2.05) and Walt Disney (DIS 54.52, +0.23) supported the space. In addition, Chipotle Mexican Grill (CMG 322.46, +17.45) added 5.7% after reporting revenue in-line with its January 16 preannouncement.

Elsewhere, the materials sector outperformed the broader market thanks to the relative strength among steel producers. Reliance Steel (RS 70.25, +5.56) surged 5.9% following an agreement to acquire all outstanding shares of Metals USA (MUSA 20.65, +2.35) for $20.65 per share. The purchase price represents a 12.8% premium to Metals USA's Tuesday closing price, and the total transaction value is estimated at $1.2 billion. Meanwhile, the broader MarketVectors Steel ETF (SLX 49.38, +0.74) added 1.5%.

On the downside, the Dow Jones Transportation Average trailed behind the broader market. The bellwether complex shed 0.2% after CH Robinson (CHRW 60.50, -6.51) reported mixed earnings. The freight carrier fell 9.7%, and was the worst performer within the S&P 500.

Relative strength among airlines prevented transportation stocks from registering further losses. Alaska Air (ALK 47.42, +0.56) and United Continental (UAL 25.32, +1.06) saw respective gains of 1.2% and 4.4%. This morning, Alaska Air reported an 11.8% increase in traffic on a 12.2% rise in capacity, as compared to January 2012.

Today's trade was centered mostly around the unchanged line. Technology (-0.2%) and health care (-0.1%) sectors weighed on sentiment. Meanwhile, telecoms (+0.3%), utilities (+0.2%), materials (+0.2%), and consumer discretionary (+0.2%) shares outperformed.

The CBOE Volatility Index (VIX 13.42, -0.30) spent the bulk of the day in the black, but the near-term volatility measure turned lower into the close.

Volume was slightly below average as just over 680 million shares changed hands on the floor of the New York Stock Exchange.

Economic data was limited to the weekly MBA Mortgage Index, which rose 3.4% to follow last week's 8.1% decline.

Tomorrow, weekly initial and continuing claims as well as preliminary fourth quarter productivity and unit labor costs will all be reported at 8:30 ET. Finally, December consumer credit will be announced at 15:00 ET. Among notable earnings, Credit Suisse (CS 29.55, +0.22) and Sony (SNE 15.82, -0.01) are scheduled to report their results ahead of the opening bell.

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