Day Traders Diary


The S&P 500 added 0.6% after a pair of weekend headlines provided an opening boost to equities. Stocks began the session sharply higher after Larry Summers, who was thought to be the hawkish frontrunner, withdrew his name from consideration to be the next chairman of the Federal Reserve.

In addition, news that Russia and the United States have signed an agreement to decommission Syria's chemical weapons within a year also contributed to the early bid.

With Larry Summers becoming an afterthought in the Fed chair discussion, bonds and equities rallied while the dollar slipped. The benchmark 10-yr note was up close to a point before surrendering most of its gain into the close. The 10-yr yield ended lower by two basis points at 2.87%.

The intraday reversal in Treasuries may have reflected the market's expectation for a $10-$15 billion tapering announcement coming at Wednesday's FOMC press conference.

Nine of ten sectors finished in positive territory while the underperformance of technology (-0.3%) weighed on the Nasdaq. The largest tech stock, Apple (AAPL 450.12, -14.78), settled lower by 3.2% as sellers were in control throughout the session. High-beta chipmakers fared a bit better as the PHLX Semiconductor Index tacked on 0.4%.

Energy (+0.02%) and consumer discretionary (+0.4%) shares lagged while the remaining cyclical sectors outperformed. The energy space ended little changed as crude oil fell 2.0% to $106.08 per barrel after the agreement to dismantle Syria's chemical weapons reduced the likelihood of a military intervention.

Meanwhile, financials (+1.1%), industrials (+1.3%), and materials (+1.1%) held near their highs into the close. The industrial sector was a notable leader as just about all components posted gains. Dow member Boeing (BA 115.67, +4.34) surged 3.9% amid reports indicating the company is nearing a fighter jet deal with South Korea's government. Transports also displayed strength as the Dow Jones Transportation Average advanced 1.1%.

Countercyclical sectors ended mixed as consumer staples (+0.9%), health care (+0.8%), and telecom services (+0.8%) outperformed while utilities (+0.2%) lagged.

Participation was a bit on the light side as 655 million shares changed hands on the floor of the New York Stock Exchange.

With the budget debate heating up once again, President Obama spoke earlier today, reminding once again that he has no plans to negotiate over the debt ceiling.

In today's economic data, the Empire Manufacturing Survey for September registered a reading of 6.3, which was down from the prior month's reading of 8.2. Economists polled by had expected that the survey would improve to 9.0.

Separately, August industrial production increased 0.4% while the consensus expected an uptick of 0.5%. Capacity utilization hit 77.8%, which was in-line with the consensus.

Tomorrow, August CPI and core CPI will be reported at 8:30 ET while July net long-term TIC flows and the September NAHB Housing Market Index will be released at 9:00 ET and 10:00 ET, respectively.

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