Day Traders Diary


The major averages settled on their lows after broad-based selling persisted throughout the session. Sellers were in control, reacting to the increased likelihood of U.S. military involvement in Syria.

In addition, investors exhibited caution amid news indicating the debt ceiling will be reached in mid-October and that Congress has yet to begin budget negotiations ahead of the new fiscal year, which begins October 1.

The S&P 500 fell 1.6% to end below its 100-day moving average for just the second time this year. Small caps endured even more selling as the Russell 2000 lost 2.4%.

Global equities sold off ahead of the U.S. open while commodities received an overnight bid that held throughout the session. Concerns over possible supply interruptions helped crude oil end at its highest level in more than a year, climbing 2.8% to $108.84 per barrel. Elsewhere, gold futures rose 1.6% and silver advanced 2.0% to $1415.50 and $24.50 per troy ounce, respectively.

Similar to oil and precious metals, Treasuries were on the receiving end of safe-haven flows with the benchmark 10-yr yield sliding eight basis points to 2.72%.

The retreat in yields helped rate-sensitive telecom services and utilities end little changed. However, other sectors were not as fortunate as six groups lost more than 1.0%, and two of those six fell more than 2.0% apiece.

Intraday rebound attempts never gathered steam as two top-weighted sectors, financials and technology, led to the downside with respective losses of 2.4% and 2.0%. The weakness in technology was notable as the sector had provided notable leadership in recent days.

Elsewhere, industrials also finished among the laggards as transportation-related companies underperformed. The Dow Jones Transportation Average fell 2.6% as airlines displayed significant weakness. Delta Air Lines (DAL 19.11, -1.16) and United Continental (UAL 27.71, -2.15) tumbled 5.7% and 7.2%, respectively.

While most cyclical sectors ended behind the broader market, the energy space outperformed with a loss of 0.6% as the surge in crude contributed to the sector's strength.

Broad losses across the major averages sent the CBOE Volatility Index (VIX 16.76, +1.77) to its highest level since early July as investors scrambled to buy protection.

Today's session was the most active since August 16, and fifth most active this month, as 683 million shares changed hands on the floor of the New York Stock Exchange.

Looking back at the day's economic data, consumer confidence improved in August as the Conference Board's Consumer Confidence Index increased to 81.5 from an upwardly revised 81.0 (from 80.3) in July. The consensus expected the index to fall to 77.0.

A sharp drop in equity prices along with weak payroll growth were expected to weigh on the Consumer Confidence Index. Instead, confidence strengthened on the back of better layoff numbers and generally positive economic media reports. It is unlikely that confidence will improve again in September. Heated budget and debt ceiling negotiations took their toll on sentiment indicators in 2011. As the media once again highlights the negative effects of a potential default or government shut down, sentiment will probably decline.

Separately, the June Case-Shiller 20-city Home Price Index rose 12.1% while a 12.0% increase had been expected by the consensus. This follows the previous month's increase of 12.2%.

Tomorrow, the weekly MBA Mortgage Index will be reported at 7:00 ET and July pending home sales will cross the wires 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.