Day Traders Diary


Equities ended February on a negative note as the S&P 500 settled with a slim loss of 0.1%. The key averages saw some morning indecision but late afternoon buying pushed the benchmark index to session highs before the index surrendered its gains.

Stocks opened the session amid some initial chop which followed a worse-than-expected second estimate of fourth quarter GDP. The slim 0.1% annualized growth followed a 0.1% contraction reported in the preliminary reading. However, the reading missed expectations as the consensus had expected growth of 0.5%. One positive element could be found in real final sales, which were revised up to 1.7% from the 1.1% reported in the advance reading.

In addition to the GDP report, J.C. Penney's (JCP 17.57, -3.59) quarterly earnings caught the attention of investors in early trade. Shares of the retailer plunged 17.0% after the company reported a loss of $1.95 on below-consensus revenue. In response, S&P cut the company's debt rating to 'CCC+' from 'B-' and assigned a negative outlook.

In other retail earnings, Kohl's (KSS 46.10, -0.51) and Limited (LTD 45.52, +1.02) beat on their respective bottom lines. However, both names issued cautious guidance.

The consumer discretionary sector ended little changed, which was good enough to outperform the broader market. However, the space was not joined by the remaining cyclical sectors. Instead, defensively-oriented telecom and utilities garnered buying interest throughout the session.

The cyclical basic materials space was an exception as the sector continued its rebound from the weakness dating back to last Wednesday. The SPDR Materials Select Sector ETF (XLB 38.49, +0.07) settled higher by 0.2% amid strength in chemical producers.

With most cyclical sectors underperforming, financials traded in tentative fashion throughout the day. Bank of America (BAC 11.23, -0.07) and JPMorgan Chase (JPM 48.92, -0.36) both lost near 0.6% while the SPDR Financial Select Sector ETF (XLF 17.59, -0.03) shed 0.2%.

As stocks settled with slim losses, the CBOE Volatility Index (VIX 15.51, +0.78) climbed higher. Looking across the VIX term structure revealed buying interest in front month contracts on VIX futures.

Reviewing S&P 500 sector performance, utilities (+0.2%), materials (+0.2%), and telecom (+0.1%) outperformed while technology (-0.2%), financials (-0.2%), and health care (-0.1%) trailed behind the broader market.

Looking back at the day's remaining economic data, initial claims for the week ending February 23 declined by 22,000 to 344,000 ( consensus 360,000). This was a supportive headline number, dropping initial claims below the range of 350,000-400,000 where they have been bounded for most of the last year. However, it will take several weeks of claims below that range to conclude a new lower bound is being established.

Also of note, the February Chicago PMI reading of 56.8 surprised to the upside as economists surveyed by had generally expected a reading of 54.0 to follow the prior month's revised reading of 55.6.

In tomorrow's economic data, January personal income, personal spending, and core PCE prices will all be reported at 8:30 ET. At 9:55 ET, the final February Michigan Consumer Sentiment Survey will be released. Finally, January construction spending and February ISM Index will both cross the wires at 10:00 ET. Among earnings of note, Best Buy (BBY 16.41, -0.19) will report its quarterly results ahead of the open.

All comments contained herein are for informational purposes only, and should not be considered as a solicitation to buy or sell any security. The firm does not guarantee the accuracy or completeness of the information or make any warranties regarding results from it's usage.