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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

8/1/13

The major averages settled near their highs as better-than-expected Manufacturing PMI data out of China (50.3 actual, 49.9 expected), the eurozone (50.3 actual, 50.1 expected), and the U.S. (53.7 actual, 53.1 expected) helped entice investors into bidding up global equities.

The S&P 500 jumped above 1,700, a level the index had struggled with in the past few sessions, and registered a record high close of 1706.87.

After jumping above 1,700 shortly after the opening bell, the S&P spent the remainder of the session trading in a seven-point range. Growth-oriented sectors displayed broad strength with financials and industrials pacing the advance.

The financial sector advanced 1.7% as all top components posted gains with American Express (AXP 75.63, +1.86) leading the way.

Elsewhere, industrials received significant support from transportation companies. The relative strength of those names helped the Dow Jones Transportation Average surge 3.2%. Index component Con-way (CNW 45.79, +4.34) jumped 10.5% after reporting a bottom-line beat on below-consensus revenue.

Transportation stocks soared even as crude oil returned to its mid-July highs. The energy component advanced 2.5% to $107.70 per barrel.

While most of today's action in the equity markets took place during the opening minutes, Treasuries and the dollar were a bit more active.

Treasuries ended on their lows as heavy selling put significant upward pressure on yields. Better-than-expected data from around the world sparked a bid in risk assets and weighed heavily on Treasuries, causing longer dated yields to close at their highest level in two years. The long bond tumbled two points and the 10-yr note shed one point as their yields jumped roughly 13 basis points apiece to their highest closes of 2013. The benchmark 10-yr yield settled at 2.72%.

Elsewhere, the Dollar Index climbed to its best level in two weeks as the greenback registered largest gains against the yen and the euro.

Today's economic data was plentiful.

The initial claims level dropped to 326,000 for the week ending July 27 from an upwardly revised 345,000 (from 343,000) for the week ending July 20. The Briefing.com consensus pegged the initial claims data at 345,000. The Department of Labor continued to blame seasonal adjustment problems from the auto industry as the catalyst for recent volatility in the initial claims data. Thus, the lowest initial claims reading since January 2008 is a statistical anomaly and not a vast improvement in labor market conditions.

Separately, the ISM Manufacturing Index jumped to 55.4 in July from 50.9 in June. The Briefing.com consensus expected the index to increase to 51.5. That was the strongest reading since June 2011. The spike easily brushed off the concerns about a longstanding pullback in manufacturing activity that came about from the unexpected contraction reported in May.

Lastly, construction spending fell 0.6% in June after increasing an upwardly revised 1.3% (from 0.5%) in May. The Briefing.com consensus expected construction spending to increase 0.2%. The drop in construction had more to do with normal volatility than a change in trends. Spending rose too much in May and a normal reset was likely to occur.

Tomorrow's data will focus on jobs. July nonfarm payrolls, nonfarm private payrolls, the unemployment rate, hourly earnings, and average workweek will all be reported at 8:30 ET. Also at 8:30 ET, June personal income, personal spending, and core PCE prices will all cross the wires. The busy day will be topped off with a 10:00 ET release of June factory orders.

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.