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Leigh Baldwin & Co.

112 Albany Street, Cazenovia, NY 13035 | Phone: (315) 655-2964 Toll Free: 1-800-659-8044

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Day Traders Diary

7/22/13

The major averages ended today's session with modest gains. The Dow added less than two points while the S&P 500 rose 0.2% to mark its twelfth advance in thirteen sessions.

Last week, the first round of second quarter earnings brought a fair share of top line misses. This week started on a similar note after Dow component McDonald's (MCD 97.58, -2.69) reported an earnings miss on below-consensus revenue. The fast food giant observed a decline in Asian and European same store sales while blaming the disappointing results on consumer uncertainty regarding the economic outlook.

Although McDonald's fell 2.7%, other quick service restaurants held up relatively well. However, the relative weakness of home builders coupled with the underperformance of the largest fast food stock kept the discretionary sector in the red throughout the day.

June existing home sales fell 1.2% from a downwardly revised 5.14 million in May to 5.08 million. The Briefing.com consensus expected existing home sales to increase to 5.28 million.

The drop in home sales does not bode well for the future. It was expected that rising mortgage rates would accelerate demand in the near term as potential buyers aimed to lock in mortgages before rates went even higher. That was supposed to pull sales forward into May, June and July, before a payback period developed in the future. However, that surge has not materialized in the June report.

In addition to discretionary shares, the consumer staples sector lagged, slipping 0.2% after Kimberly-Clark (KMB 97.68, -1.81) reported an earnings beat on below-consensus revenue.

The broader market was kept from registering larger gains by the underperformance of the energy sector, which shed 0.3% while crude oil fell 1.1% to $106.69 per barrel.

However, another commodity-linked sector, materials, finished among the leaders as industrial and precious metals displayed strength. Copper futures added 1.3% to $3.182 per pound and gold futures jumped 3.1% to $1333.00 per troy ounce. The yellow metal returned to its 50-day moving average while gold miners also registered solid gains. The Market Vectors Gold Miners ETF (GDX 27.44, +1.58) spiked 6.1%.

Elsewhere, the outperformance of major bank shares helped the financial sector settle higher by 0.7%.

Also of note, the technology sector rose 0.4% and Google (GOOG 910.54, +13.94) climbed 1.6% to erase its Friday slide caused by disappointing earnings.

Today's participation was limited as only 585 million shares changed hands on the floor of the New York Stock Exchange.

Tomorrow's economic data will be limited to the May FHFA Housing Price Index, which will be released at 9:00 ET.

The U.S. Treasury will auction $35 billion in 2-yr notes.
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