Day Traders Diary


The S&P 500 settled lower by 0.6% as all ten sectors registered losses.

Stocks slipped out of the gate after today's better-than-expected economic data was unable to spark an opening bid.

The June trade deficit narrowed to $34.2 billion from May's downwardly revised $44.1 billion (from $45.0 billion). That was the smallest monthly trade deficit since October 2009. The consensus expected the deficit to fall to $43.4 billion. In the advance estimate for second quarter GDP, the Bureau of Economic Analysis assumed the trade deficit widened slightly in June. This huge downward surprise will likely add at least 0.5 percentage points to second quarter growth.

June exports increased by $4.1 billion to $191.2 billion, representing the largest amount of exports, nominal or real, on record. On the flip side, imports fell by $5.8 billion to $225.4 billion. Nearly the entire decline in imports was due to a drop in petroleum-based demand (-$2.0 billion) and a softening
in cell phone imports (-$1.5 billion).

The S&P spent the first 90 minutes of the session in a steady decline as cyclical sectors pressured the index below the 1,700 level with financials, materials, and industrials leading to the downside.

All top-weighted banks ended in the red with Citigroup (C 51.48, -1.39) posting the largest loss among the majors. Meanwhile, the broader sector slid 0.9%.

Elsewhere, the materials space (-1.0%) finished at the bottom of the leaderboard as steelmakers, gold miners, and chemical producers displayed broad weakness. On a related note, gold futures fell 1.5% to $1282.90 per troy ounce while copper futures ended little changed at $3.173 per pound.

Another growth-oriented group, industrials, settled lower by 0.8% due to the underperformance of transportation-related names. The Dow Jones Transportation Average fell 1.3% as 18 of 20 components registered losses. Expeditors International (EXPD 41.21, +0.87) advanced 2.2% after beating on earnings and peer UPS (UPS 87.95, +0.09) tacked on 0.1% in sympathy.

Most cyclical sectors trailed behind the broader market, but technology and discretionary shares outperformed slightly. Although the tech sector ended off its lows, the largest component, Apple (AAPL 465.25, -4.20), slid 0.9%, and the top-weighted Dow component, IBM (IBM 190.99, -4.51), tumbled 2.3%.

In the discretionary space, media and publishing names displayed some strength after Washington Post (WPO 593.00, +24.30) agreed to sell its newspaper publishing business to Jeff Bezos. However, home builders and retailers lagged. The iShares Dow Jones US Home Construction ETF (ITB 21.90, -0.48) lost 2.1% and the SPDR S&P Retail ETF (XRT 81.97, -1.02) slumped 1.2% after American Eagle Outfitters (AEO 17.57, -2.40) issued cautious guidance.

Unlike growth-sensitive sectors, three of four countercyclical groups were able to erase a portion of their losses. Consumer staples, health care, and telecom services shed between 0.1% and 0.5% while the utilities space underperformed with a loss of 0.6%.

Today's volume was well ahead of yesterday, but at 658 million shares traded on the New York Stock Exchange, the final tally came up short of its 50-day moving average, which sits in the 768 million area.

Tomorrow, the weekly MBA Mortgage Index will be reported at 7:00 ET and June consumer credit will be released at 15:00 ET. 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.