Day Traders Diary


The major averages ended with modest losses as the S&P 500 shed 0.6%.

Equities opened the session on an upbeat note as the Dow Jones Industrial Average appeared poised for its 21st consecutive Tuesday of gains. However, that changed midway through the trading day when the major averages dipped into the red, where they remained until the close.

The afternoon weakness left eight of the ten sectors in the red, but was most noticeable among cyclical groups as energy, financials, and industrials lost between 0.6% and 0.9%.

The energy space trailed behind the broader market from the start, and was unable to hold a gain even as every other sector displayed early strength. The growth-sensitive group was largely unaffected by the swings in crude oil as the energy component traded in a $2.00 range before ending little changed at $93.50 per barrel.

Elsewhere, weakness in all major banks pressured the financial sector, which settled lower by 0.9%.

Another growth-sensitive group, industrials, endured sector-wide selling as defense and transportation stocks retreated. The PHLX Defense Index fell 0.7% while the Dow Jones Transportation Average shed 0.5%.

Discretionary stocks outperformed other growth-oriented sectors, but a large subsector, homebuilders, did not share in the relative strength. Several major builders saw losses of more than 3.0%, and the iShares Dow Jones Home Construction ETF (ITB 23.43, -0.67) fell 2.8%.

Also of note, the technology sector saw some mixed performance as chipmakers advanced while major components lagged. The PHLX Semiconductor Index rose 0.4% while Dow component Microsoft (MSFT 34.99, -0.60) declined 1.7%.

On the upside, the telecom sector spent the entire day in positive territory as two major components, AT&T (T 35.67, +0.60) and Verizon Communications (VZ 48.84, +0.18), settled with respective gains of 1.7% and 0.4%.

In M&A news, (CRM 37.80, -3.24) acquired ExactTarget (ET 33.69, +11.59) for $33.75 per share. The total transaction is valued at $2.5 billion, and the purchase price represents a 53% premium to ExactTarget's closing price from yesterday.

Today's economic data was limited to the April trade deficit, which widened to $40.3 billion from $37.1 billion. The consensus expected the deficit to come in at $41.0 billion.

Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while May ADP Employment Change will be announced at 8:15 ET. The revised first quarter productivity reading and unit labor costs will be released at 8:30 ET while April factory orders and May ISM Services will be announced at 10:00 ET. The day will be topped off with the 14:00 ET release of the Federal Reserve's Beige Book for June.

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