Day Traders Diary


The major averages ended today's session on a mixed note. The Dow added 0.1% while S&P 500 shed 0.1% after late-afternoon weakness pressured the index to its lows.

Equities saw little change into the final two hours of trade when reports indicated Wal-Mart (WMT 69.30, -1.52) saw a slow start to its February sales. Bloomberg obtained emails from the company's vice president of finance and logistics who said "February [month-to-date] sales are a total disaster." The vice president also said this was the worst start to a month he has seen in his seven years with the company.

Shares of Wal-Mart fell to session lows on heavy volume, but managed to recover a portion of their losses. In addition, the news weighed on other retailers. Target (TGT 61.71, -1.02) and Family Dollar (FDO 55.94, -0.67) saw respective losses of 1.6% and 1.2%. Meanwhile, the broader SPDR Retail ETF (XRT 67.47, -0.26) lost 0.4% after being up as much as 1.4% in earlier trade.

The consumer staples sector saw activity throughout the day. This morning, Campbell Soup (CPB 39.40, +0.68) J.M. Smucker (SJM 92.40, +0.24), and Kraft Foods (KRFT 47.17, +0.01) reported earnings. All three names beat on the bottom line and Kraft was the only one of the three which missed on revenue.

Consumer stocks fared relatively well into the afternoon and the discretionary sector was the top performer until the Wal-Mart news spilled over to several other retail names.

Contributing to the early strength was an upbeat January consumer sentiment survey from the University of Michigan. According to the preliminary reading, the survey rose to 76.3 from its prior reading of 73.8. Today's report surprised to the upside as the consensus had expected the survey would climb to 73.5.

While consumer stocks were in focus for the bulk of the day, the energy sector was the day's biggest laggard. The SPDR Energy Select Sector ETF (XLE 78.45, -0.91) lost 1.2% amid weakness in crude oil. The energy component fell 1.4% to $95.99.

The CBOE Volatility Index (VIX 12.51, -0.15) settled in the red despite a brief jump into positive territory. However, the term structure of VIX futures reveals some buying interest at the distant end of the curve as June, July, September, and October contracts settled with slight gains.

When the dust from today's active afternoonand not so active remainder of the daysettled, defensively-oriented sectors ended in the lead. Telecoms (+0.3%), utilities (+0.3%), health care (+0.2%), and consumer staples (+0.2%) outperformed while energy (-1.1%), financials (-0.3%), and technology (-0.1%) lagged.

Today's volume represented the highest total of the week as 940 million shares changed hands on the floor of the New York Stock Exchange. However, February options expiration did its part to push the total above its 50-day average, which sits in the neighborhood of 700 million.

Comments from this weekend's G20 summit taking place in Russia have begun making the rounds. Earlier, Jens Weidmann of Germany's Bundesbank said the euro is not overvalued and the European Central Bank President Mario Draghi is not talking down the common currency. Meanwhile, Mr. Draghi said euro exchange rate is not a policy target for the central bank.

Looking at the day's remaining economic data, January industrial production decreased 0.1%, which was worse than the 0.2% uptick that had been expected by the consensus. Meanwhile, capacity utilization hit 79.1%, which was better than the 78.9% expected by the consensus.

February Empire Manufacturing Survey climbed to 10.0 from its prior reading of -7.8. The report was a positive surprise as the consensus expected the survey to rise to 0.0.

Lastly, net long-term TIC flows showed an inflow of $52.3 billion in foreign funds into USD-denominated assets during November.

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