Day Traders Diary


Equities ended the day with slim losses causing the S&P 500 to slip 0.2%. Though stocks saw little change at the outset of the session, sellers were able to take control within the first 30 minutes, and drive the major averages to their respective lows.

The early broad-based weakness came about as the dollar index spiked to its highs in the 80.20 area. The sharp move took place after European Central Bank President Mario Draghi voiced concerns over the strength of the euro. The common currency weakened immediately following his remarks, falling to its session low near 1.3400 against the greenback.

The morning dollar strength had a negative impact on commodities and commodity-related stocks. As such, the materials sector was pressured, and ended as the weakest performer today. The SPDR Materials Select Sector ETF (XLB 39.15, -0.21) shed 0.5%.

High-beta sectors underperformed for the duration of the day. Technology stocks lagged despite the outperformance from Apple (AAPL 468.22, +13.52). The largest tech stock saw intraday strength after activist investor, David Einhorn, said the company has a cash problem, thinking it can never have enough of it, and its preferred stock should yield 8.0%. Shares of Apple spiked to fresh highs in afternoon trade after the company responded to Mr. Einhorn's comments by saying it will "thoroughly evaluate" the proposal.

Elsewhere in technology, microprocessor manufacturers lagged as disappointing earnings from Peregrine Semiconductor (PSMI 9.41, -1.57) weighed. The broader PHLX Semiconductor Index ended lower by 0.6%.

In notable tech earnings, Akamai Technologies (AKAM 35.26, -6.32) plunged 15.2% after the company missed on the top line and issued cautious revenue guidance.

Today, retailers reported their same store sales for the month of January. While most names reported results ahead of the Retail Metrics consensus, their stocks received a mixed investor response. The SPDR S&P Retail ETF (XRT 67.47, -0.31) settled lower by 0.5%.

While retailers and discretionary stocks traded in-line with the broader market, consumer staples outperformed. The sector was the top advancer thanks to relative strength of cigarette producers. The largest industry component, Philip Morris (PM 89.82, +2.13), rose 2.4% after beating on earnings.

Defensive-minded trade also favored the utilities sector which held slight gains throughout the day. Sector component Exelon (EXC 31.37, +0.39) added 1.3% despite guiding first quarter earnings below consensus. However, the electricity producer expects a better second half with full-year 2013 earnings in-line with analyst expectations.

As mentioned earlier, the materials (-0.6%) sector was the weakest, followed by energy (-0.5%), financials (-0.4%), and telecoms (-0.4%). Meanwhile, consumer staples (+0.5%), and utilities (+0.2%) outperformed.

Volume was below-average with just 664 million shares changing hands on the floor of the New York Stock Exchange.

The day's economic data did little to influence the trading sentiment. Initial claims were reported at 366,000, which puts the figure right inside of last year's 350,000-400,000 range.

Meanwhile, the 2.0% drop in fourth quarter productivity was the result of a very small increase in output (0.1%) combined with a solid increase in hours worked (2.2%).

Lastly, unit labor costs increased 4.5% after declining 2.3% in the third quarter. That was the biggest increase in unit labor costs since increasing 6.4% in Q1 2012.

Tomorrow, the December trade balance will be reported at 8:30 ET while December wholesale inventories will be announced at 10:00 ET. Among notable earnings, CBOE Holdings (CBOE 34.30, +0.07) and Louisiana-Pacific (LPX 20.49, +0.25) will report their quarterly results ahead of the opening bell.

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