Day Traders Diary


The S&P 500 ended lower by 0.4% to snap its streak of eight consecutive gains. Today's decline marked only the third time this month where the S&P registered a loss, and first with a decline of more than one point.

Heavily-weighted sectors, including financials and health care, pressured the broader market despite better-than-expected quarterly results from Goldman Sachs (GS 160.24, -2.76) and Johnson & Johnson (JNJ 90.40, 0.00). In addition, market participants appeared cautious ahead of tomorrow's testimony by Fed Chairman Ben Bernanke in front of the House Financial Services Committee. Mr. Bernanke's prepared remarks are set to be released at 8:30 ET and the testimony is scheduled to begin at 10:00 ET.

Cyclical sectors underperformed with energy and materials leading to the downside. The energy space shed 0.6% while crude oil slipped 0.5% to $105.78 per barrel. In addition, cautious second quarter guidance issued by Marathon Petroleum (MPC 69.93, -3.17) weighed on the sector.

Although producers of basic materials trailed behind the broader market (-0.8%), most of the weakness was contained to chemical producers after Mosaic (MOS 54.12, -2.01) reported in-line results but disappointed on potash pricing. Meanwhile, steelmakers and gold miners displayed relative strength with the Market Vectors Steel ETF (SLX 39.74, +0.31) and Market Vectors Gold Miners ETF (GDX 25.65, +1.36) rising 0.8% and 5.6%, respectively. On a related note, gold futures climbed 0.6% to $1291.60 per troy ounce.

Elsewhere, discretionary shares suffered from broad weakness as homebuilders and retailers lagged. The iShares Dow Jones US Home Construction ETF (ITB 22.97, -0.14) jumped after the July NAHB Housing Market Index surpassed expectations (57 actual, 51 expected), but surrendered its gains shortly thereafter. With regard to retailers, the SPDR S&P Retail ETF (XRT 80.66, -0.56) slumped 0.7%. While most cyclical groups ended firmly in the red, the technology sector continued its recent outperformance amid general strength. The group ended little changed and held its July gain of 5.1%.

Defensively-oriented sectors finished in mixed fashion. Telecom services outperformed with a gain of 0.6% while health care and utilities each lost 0.5%. For its part, the consumer staples sector ended in-line with the broader market. Sector component Coca-Cola (KO 40.23, -0.78) shed 1.9% after missing on revenue.

Treasuries were confined to a narrow range, and the benchmark 10-yr yield ended lower by two and a half basis point at 2.532%.

June consumer prices rose 0.5%, which was above the 0.3% uptick that had been expected by the consensus. This followed the prior month's increase of 0.1%. The jump in prices was mostly a result of a 6.3% increase in the gasoline index. In addition, core prices rose 0.2%, in line with the consensus.

Industrial production increased 0.3% in June, which was in-line with the consensus estimate. That followed on the heels of an unchanged reading for May and was driven by a 0.3% increase in manufacturing production and a 0.8% jump in the output at mines. The output of utilities decreased 0.1%.

Lastly, the May net long-term TIC flows report indicated a $27.2 billion outflow of foreign capital from U.S. denominated assets. This followed the prior month's $37.3 billion outflow.

Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while June housing starts and building permits will be announced at 8:30 ET. At 14:00 ET, the Federal Reserve will release its Beige Book for July. On the earnings front, Abbott Labs (ABT 35.70, +0.22) and Bank of America (BAC 13.92, +0.04) will report their quarterly results before the opening bell. 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.