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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

8/22/13

The major averages registered gains across the board, but a three-hour halt of all Nasdaq-listed issues prevented normal trading from taking place throughout the afternoon.

Stocks climbed out of the gate after upbeat survey data from China and the eurozone reassured investors. China's HSBC Manufacturing PMI jumped to 50.1 from 47.7 (48.3 expected) while the eurozone Manufacturing PMI improved to 51.3 from 50.3 (50.8 forecast). In addition, the Services PMI reading rose to 51.0 from 49.8 (50.2 expected).

The economic data provided a boost to growth-sensitive sectors as five of six cyclical groups registered gains larger than 1.0%. The technology sector lagged with an advance of 0.5%. The largest sector component, Apple (AAPL 502.96, +0.60), ended little changed and Dow member Hewlett-Packard (HPQ 22.22, -3.16) endured its worst session in two years, falling 12.5%, after reporting in-line results and saying it is unlikely to experience revenue growth in 2014.

Speaking of technology, the tech-heavy Nasdaq fell victim to an early-afternoon glitch that kept all member shares from trading for three full hours. The impact could be felt across other indices as they drifted inside narrow ranges on thin volume.

Once normal trading resumed during the final hour of the day, the major indices rose to fresh highs. The S&P tested its 50-day moving average, but could not settle above that level.

The energy sector finished atop the leaderboard with a gain of 1.4% as crude oil advanced 1.2% to $105.05 per barrel.

Interestingly, the discretionary sector also finished among the leaders despite weakness in the retail space. Recent quarterly reports from retailers have not reflected very well on consumer spending. That theme remained in effect today as Abercrombie & Fitch (ANF 38.53, -8.27) missed on earnings and revenue while guiding third quarter earnings below analyst expectations. The SPDR S&P Retail ETF (XRT 79.14, +0.12) ended little changed, but the discretionary sector climbed 1.1% with home builders contributing to the strength.

Treasuries registered losses as the benchmark 10-yr yield added nearly five basis point to 2.90%.

Trading volume was well below average with only 573 million shares changing hands on the floor of the NYSE as the afternoon Nasdaq halt took a bite out of activity.

Investors received a handful of economic data today. The initial claims level rose to 336,000 for the week ending August 17 from an upwardly revised 323,000 (from 320,000) for the week ending August 10. The Briefing.com consensus expected the initial claims level to increase to 337,000. The upward move in the initial claims level is likely just normal volatility. Over the past four weeks, moving average for initial claims has dropped to its lowest level since November 2007.

Separately, the Conference Board's Index of Leading Indicators increased 0.6% in July after holding flat in June. That was the strongest increase since increasing 0.8% in April. The Briefing.com consensus expected the index to increase 0.5%.

Since eight of the 10 components of the index are known prior to the release, the difference between the actual number and the consensus is typically minor. In this case, a smaller-than-expected decline in manufacturers' new orders of nondefense capital goods excluding aircraft was the likely cause for the small upside surprise.

Lastly, the June FHFA Housing Price Index rose 0.7% to follow last month's 0.8% increase.

Tomorrow's economic data will be limited to July new home sales with the report set to be released at 10:00 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.