Day Traders Diary


The S&P 500 settled higher by 1.0% as all ten sectors registered gains.

Equities began the session on an upbeat note despite today's disappointing economic news, which indicated first quarter GDP growth was revised down with the third estimate to 1.8% from 2.4%. Typically, revisions to GDP in the third estimate are very minor. The large decline in this report was very unusual and caught all economists by surprise.

Most of the downward revision came from consumption in services. In the previous estimate, services spending increased 3.1%. That was revised down to 1.7% growth and contributed 0.6 percentage points less to GDP growth.

Stocks received this news in stride as sluggish growth suggests the Federal Reserve is less likely to withdraw its support from the markets. To that end, the Treasury complex received an aggressive bid immediately after the GDP revision crossed the wires. The benchmark 10-yr yield ended lower by seven basis points at 2.542%.

There was no defined sector leadership today as health care and utilities finished atop the leaderboard while the discretionary sector and industrials followed closely.

The health care space rose 1.5% as biotechnology rallied. The iShares Nasdaq Biotechnology ETF (IBB 173.02, +4.38) advanced 2.6%.

Another countercyclical group, utilities, settled higher by 1.3% as today's gain allowed the rate-sensitive sector to erase its June loss and join the telecom space in positive territory for the month.

Elsewhere, the discretionary sector climbed 1.3% as most components rebounded from recent weakness. However, homebuilders remained shaky. DR Horton (DHI 20.92, +0.01) ended little changed, Toll Brothers (TOL 32.56, +0.60) added 1.9%, while the broader iShares Dow Jones US Home Construction ETF (ITB 22.21, +0.19) rose 0.9%. Despite today's advance, the homebuilders ETF is down more than 15.0% since notching its mid-May high.

Also of note, the industrial sector received a boost from transportation-related names as the Dow Jones Transportation Average added 0.8%.

Precious metals endured another rough session as gold futures fell 3.9% to $1225.00 per troy ounce while silver futures declined 5.2% to $18.50 per troy ounce.

With stocks ending on their highs, the CBOE Volatility Index (VIX 17.22, -1.25) settled on its lowest level in more than a week.

Tomorrow, weekly initial claims, May personal income, personal spending, and core PCE prices will all be reported at 10:00 ET while the May pending home sales report will cross the wires at 10:00 ET.

The U.S. Treasury will auction $29 billion in 7-yr notes.
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