Day Traders Diary


The S&P 500 added 0.4% after intraday weakness pressured the benchmark index below its 100-day moving average. Equities displayed broad strength at the open after global indices rallied yesterday while U.S. markets were closed for Labor Day. The early gains did not hold past the initial two hours as late-morning comments from House Speaker John Boehner and Majority Leader Eric Cantor served as a reminder that the option of military action in Syria remains on the table. Both Speaker Boehner and Mr. Cantor said they support the president's "call to action" with U.S. Congress scheduled to debate the issue next week.

Crude oil climbed off its overnight lows as the remarks from the two Congressional leaders provided an additional boost. The energy component rose 0.8% to $108.55 per barrel while the energy sector added 0.6%.

Elsewhere in the commodity complex, metals outperformed. Gold futures advanced 1.2% and silver futures spiked 3.4% to $1412.30 and $24.31 per troy ounce, respectively. In addition, copper jumped 2.4% to $3.312 per pound. As a result, the materials sector finished among the leaders with a gain of 0.6%.

Outside of the two commodity-linked sectors, financials (+0.8%) and discretionary (+0.8%) shares settled in the lead.

The Dow trailed behind the remaining averages as Microsoft (MSFT 31.88, -1.52) and Verizon (VZ 46.01, -1.37) pressured the price-weighted index. Microsoft fell 4.6% after the company agreed to acquire Nokia's (NOK 5.12, +1.22) Devices & Services business and its patents and mapping services for $5.44 billion. Meanwhile, Verizon lost 2.9% after announcing plans to purchase Vodafone's (VOD 32.01, -0.34) 45% stake in Verizon Wireless for $130 billion in cash and stock. The underperformance of Verizon weighed on the telecom services space (-1.8%) which settled behind the remaining nine sectors.

Treasuries slid to their lows in reaction to today's better-than-expected economic data, but ended off their worst levels as a safety bid trickled in during afternoon trade. Investors returned to the complex following the hawkish comments on the situation in the Middle East. After climbing above 2.91% early in the session, the benchmark 10-yr ended up 10 basis points at 2.85%.

Today's participation marked an improvement over most August sessions as nearly 800 million shares changed hands on the floor of the New York Stock Exchange.

The ISM Index for August improved to 55.7 from 55.4 in July. That was better than expected as the consensus estimate called for a modest decline to 53.4. This is encouraging news insomuch as it relates to the outlook for the manufacturing sector, yet some detail below the headline print indicates manufacturers are no more than cautiously optimistic.

The good news is that the new orders index fueled the improvement in August, rising to 63.2 from 58.3. Notwithstanding that pickup, the employment index decelerated to 53.3 from 54.4. In other words, new business prospects are in the pipeline, yet manufacturers aren't ramping up hiring to fill the new orders.

Construction spending increased 0.6% in July after being flat in June. The July number was pretty much in-line with expectations. The data for June, however, improved from the prior report, which showed a 0.6% decline.

Private construction spending was up 0.9% after declining 0.2% in June. That was paced by a pickup in nonresidential spending, which jumped 1.3% after declining 0.9% in June. Private commercial (+1.7%), manufacturing (+2.9%) and lodging (+6.1%) spending increased in July.

Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET and the July trade balance will cross the wires at 8:30 ET. In addition, the Federal Reserve will release its September Beige Book at 14:00 ET.

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