Day Traders Diary


The major averages settled with modest gains as late afternoon selling took hold following a headline from Nikkei news, indicating Japan plans to impose new foreign exchange margin trading rules. The news caused dollar/yen to slip into the red while also weighing on equities.

Six of ten sectors ended in the black as financials and technology paced the broad market gains.

Most major financials saw gains of at least 1.0% as Morgan Stanley (MS 25.82, +0.84) climbed 3.4% to outperform its peers. Meanwhile, the broader financial sector rose 1.1% to extend its May gain to 7.6%.

Elsewhere, technology shares received support from major components like Apple (AAPL 451.58, +6.63), and Microsoft (MSFT 35.03, +0.15), as well as high-beta chipmakers. The PHLX Semiconductor Index settled higher by 1.5%.

The relative strength of technology contributed to the outperformance of the Nasdaq, with additional support coming from biotech. The Nasdaq Biotechnology ETF (IBB 183.23, +2.16) gained 1.2%.

Biotechnology also constitutes a good portion of the health care sector, which outperformed its defensively-oriented peers, adding 0.7%.

Another defensively-minded group, utilities, was up as much as 2.0% in early action before surrendering the bulk of its gains to settle up 0.2%. The morning rally took place after NV Energy (NVE 23.62, +4.34) agreed to be acquired by Berkshire Hathaway's MidAmerican for $23.75 per share, representing a 23.2% premium to yesterday's closing price. Despite ending in the black, the utilities sector remains the weakest performer of the month, down 9.0%.

Only a handful of names reported their quarterly results this morning. Industrial component Joy Global (JOY 55.61, +0.53) added 1.0% after its above-consensus results overshadowed the machinery manufacturer's cautious full-year guidance.

In retail earnings, Express (EXPR 21.20, +2.41) surged 12.8% after its solid report was coupled with upbeat bottom-line guidance. Meanwhile, the SPDR S&P Retail ETF (XRT 77.79, +0.27) tacked on 0.4%.

Initial claims for the week ending May 25 jumped by 10,000 to 354,000. The consensus expected the claims level to be 340,000. That bumped up the four-week moving average by 6,750 to 347,250.

The second estimate of first quarter GDP produced a small downward revision to 2.4% from 2.5% ( consensus +2.5%) while the GDP deflator slipped to 1.1% from 1.2% ( consensus +1.2%).

The upshot of the revision was that personal consumption expenditures growth was revised higher to 3.4% from 3.2%. That was the highest growth rate since the fourth quarter of 2010 and it boosted the PCE contribution to GDP growth to 2.4 percentage points from 2.2 percentage points at the first estimate.

Increases in private inventory investment, exports, and imports were less than previously estimated. The lower contribution from the change in private inventories and nonresidential structures were offsetting factors to the uptick in the PCE contribution.

Lastly, pending home sales for April rose 0.3%, which was worse than the 1.5% increase forecast by the consensus. Today's reading follows last month's rise of 1.5%.

Tomorrow, April personal income, personal spending, and core PCE prices will all be announced at 8:30 ET. This will be followed by the 9:45 ET release of the May Chicago PMI while the final Michigan Consumer Sentiment Survey for May will cross the wires at 9:55 ET. 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.