Day Traders Diary


The major averages ended today's session on a positive note. After spending the day in a narrow range, the Nasdaq settled as the top performing index with a gain of 0.3%.

In many ways, today's session mimicked yesterday's range bound affair with financials and materials settling in the lead.

Major financials outperformed even as the market awaited the Federal Reserve's CCAR report, scheduled for after the close. This is more commonly known as a bank stress test, and should provide some insight on the health of the banking sector. Bank of America (BAC 12.26, +0.34) was the top performer among the majors while the broader SPDR Financial Select Sector ETF (XLF 18.19, +0.13) gained 0.7%.

Today's outperformance of the materials sector was aided by steelmakers. This was the second consecutive session where steel producers acted in support of the sector. The Market Vectors Steel ETF (SLX 45.75, +0.20) added 0.4%.

The technology sector also displayed relative strength as its largest component, Apple (AAPL 430.58, +4.92), settled higher by 1.2%.

Several networking-related names outperformed after Ciena (CIEN 17.53, +2.59) reported first quarter earnings well ahead of its Capital IQ consensus estimate. Investors viewed the report as a positive sign regarding the health of Ciena's peers. F5 Networks (FFIV 94.23, +1.12) and JDS Uniphase (JDSU 15.23, +1.08) ended with respective gains of 1.2% and 7.6%.

Equities were driven higher by cyclical sectors, but the Dow Jones Transportation Averagewhich has climbed 14.6% year-to-datewas absent from the rally. The bellwether complex lost 0.5% amid broad weakness in railroads.

While the record-setting levels in the Dow Jones Industrial Average received notable headline attention, the Dow Jones Transportation Average was setting an all-time high of its own. The transports marked fresh highs shortly after yesterday's open, but have surrendered nearly 2.0% since.

The underperformance of a group which made large contributions to this year's rally bears noting. However, since the broader market registered gains today, this suggests money was moving around the market rather than out of the market.

On the downside, defensively-oriented consumer staples, health care, and utilities registered losses. The utilities sector was the weakest performer and the SPDR Utilities Select Sector ETF (XLU 37.89, -0.17) shed 0.5%.

Investors received a handful of economic data points today. Weekly initial claims were reported at 340,000 while the consensus had expected a reading of 350,000. The report was encouraging as this was the second week which saw claims remain below the 350,000-400,000 range observed for much of last year.

Productivity was revised slightly higher to show a 1.9% decline versus a 2.0% decline that was previously reported. Unit labor costs were revised up to show a 4.6% increase versus the prior reading showing a 4.5% increase.

January trade deficit widened to $44.4 billion from $38.1 billion in December. Today's reading fell short of the $43.0 billion deficit expected by the consensus and the January report is apt to be a negative factor in many economists' models for first quarter GDP growth forecast.

According to the Federal Reserve, consumer credit increased by $16.2 billion in January. This follows the prior month's revised $15.1 billion increase, and is higher than the $12.8 billion that had been broadly expected among economists polled by

Tomorrow's economic data will focus on jobs. February nonfarm payrolls, nonfarm private payrolls, unemployment rate, hourly earnings, and average workweek are all scheduled for an 8:30 ET release. Lastly, January wholesale inventories will be reported at 10:00 ET.

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