Day Traders Diary


Equities finished the day on a mixed note. The Dow climbed 0.3% and registered its highest close of the year while the S&P 500 added 0.2%, and Nasdaq shed 0.2%. The day got off to a slow start as the major averages spent the entire morning near their respective unchanged levels. However, key indices were able to climb to their highs in afternoon trade as financials paced the advance.

The financial sector led throughout the session, and the S&P 500 Financials Index climbed above 240 for the first time since October 2008. Bank of America (BAC 12.24, +0.38) and Citigroup (C 44.35, +1.20) both gained near 3.0% to support the space.

While financials led throughout the session, defensively-oriented telecommunication stocks spent the day in an upward climb and ended as the second best performing sector.

With no market-moving economic data, traders turned to earnings as several consumer names reported their quarterly results. The discretionary sector outperformed after market participants responded favorably to earnings from Fossil (FOSL 110.65, +3.19) and Michael Kors (KORS 62.00, +5.00). Fossil advanced 3.0% after reporting in-line earnings on better-than-expected revenue. Meanwhile, the company's guidance reflected a recent pattern. Fossil warned against a slowdown in the first quarter, but left its full-year guidance intact. This indicates the company believes the latter part of the year will make up for expected first quarter softness.

Elsewhere, Michael Kors spiked 8.8% after its earnings came in well ahead of expectations.

The discretionary space was supported by upbeat earnings, but quarterly results had the opposite effect on consumer staples. Coca-Cola (KO 37.56, -1.05) settled lower by 2.7% after the beverage giant warned against continued global uncertainty.

As consumer staples held slim losses throughout the day, afternoon trade saw relative weakness from technology stocks. The space was pressured by Apple (AAPL 467.90, -12.03), which lost 2.5%, after Chief Executive Officer Tim Cook did not hint at near-term changes to the company's dividend policy. Elsewhere, Qualcomm (QCOM 65.88, -1.30) dropped 1.9% after JPMorgan Chase downgraded the stock to 'Neutral' from 'Overweight.'

Today's floor volume represented a marked improvement over yesterday's session, but it remained well below average as just over 610 million shares changed hands.

Looking at the S&P 500 sector breakdown, financials (+0.8%) and telecoms (+0.6%) were the clear leaders while technology (-0.5%), health care (-0.2%), and consumer staples (-0.1%) brought up the rear.

Overseas, world leaders are preparing for the G20 summit scheduled to take place in St. Petersburg later this week. Reports from the meetings will be closely watched as recent months have seen a rise in currency commentary. With Japan taking active efforts to weaken the yen and daily remarks from European officials suggesting what the "right" level for the euro should be, the summit is likely to produce some noteworthy quotes.

Investors received just one economic report today and it came in the form of the January Treasury budget. This report pointed to a surplus of $2.88 billion, which was better than the deficit of $2.0 billion expected by the consensus.

Note that President Barack Obama will give the first State of the Union address of his second term at 21:00 ET tonight.

Looking at tomorrow's economic data, weekly MBA Mortgage Index will be reported at 7:00 ET. At 8:30 ET January retail sales, retail sales ex-auto, export prices ex-agriculture, and import prices ex-oil will all be released. Lastly, December business inventories will be announced at 10:00 ET. In notable earnings, Comcast (CMCSA 38.97, +0.33) and Deere (DE 93.97, +0.74) will report their quarterly results prior to the opening bell.

The U.S. Treasury will auction off $24 billion in 10-yr notes.

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