Day Traders Diary


The S&P 500 added 0.4%, snapping its five-day losing streak that saw the index surrender almost 2.0%. Although the benchmark average settled in the green, it was unable to maintain all of its early gain or register a close above the 1,700 level.

In general, some of today's price action resembled that of yesterday with the S&P making two unsuccessful runs at 1,700. However, unlike yesterday, the major averages ended in positive territory with the Nasdaq in the lead (+0.7%).

The tech-heavy index benefitted from the outperformance of biotech as the iShares Nasdaq Biotechnology ETF (IBB 210.16, +3.40) climbed 1.6%. Meanwhile, major traditional tech companies were mixed. Apple (AAPL 486.22, +4.69) advanced 1.0% and Intel (INTC 23.41, -0.29) lost 1.2%. The broader tech sector added 0.3%.

Today's performance of financials also marked a departure from yesterday as top components ended mixed. Citigroup (C 48.93, -0.33) was the weakest performer among the majors while the sector ended little changed. Despite yesterday's rebound, the sector is down almost 3.5% since last Thursday.

On a related note, JPMorgan Chase (JPM 51.89, +0.19) President and Chief Executive Officer Jamie Dimon met with Attorney General Eric Holder to discuss a potential settlement in a mortgage-backed securities issuance case brought against the bank. However, no announcement was made today.

Remaining cyclical sectors were mixed as energy (+0.1%) lagged; consumer discretionary (+0.9%) and materials outperformed (+0.6%); and industrials (+0.4%) ended in-line with the S&P.

Notably, the discretionary sector received support from apparel manufacturers with Nike (NKE 70.34, +1.42) rising 2.1% ahead of its quarterly earnings report, scheduled for an after-hours release.

Even though equities posted gains, it was the final-hour rally that saved the market from ending on session lows. With choppy price action abound, the CBOE Volatility Index (VIX 14.05, +0.04) added 0.3% as participants adjusted their near-term volatility expectations.

Treasuries posted slim losses with the benchmark 10-yr yield rising one basis point to 2.65%.

Trading volume was below average as only 603 million shares changed hands on the floor of the NYSE.

This morning, market participants heard from Minneapolis Fed President Narayana Kocherlakota, who said low inflation levels give the Fed room to expand the scope of its policy reach. Mr. Kocherlakota channeled his inner Mario Draghi by adding that the central bank will do "whatever it takes" to achieve the goal of higher employment.

In overseas news of note, Italian markets lagged amid reports President Giorgio Napolitano cancelled a planned appearance at an event due to a "disturbing" political development. After European markets closed for the day, a separate report indicated Prime Minister Enrico Letta called a summit of the parties for a 'government check-up.' These developments followed yesterday's comments from PDL lawmakers who reiterated their intention to quit the government should Silvio Berlusconi be banned from office. In reaction, Italy's benchmark 10-yr yield rose seven basis points to 4.30%.

In today's economic data, the weekly initial claims level fell to 305,000 from an upwardly revised 310,000 (from 309,000). The consensus expected the initial claims level to increase to 325,000. There were no special factors that impacted the initial claims this week. The computer glitches, which caused biases over the previous two weeks, have been corrected. As such, the report suggests real improvement in labor conditions in September.

Separately, the third estimate for second quarter GDP was little changed at 2.5%. The GDP price deflator, though, was revised down to 0.6% from 0.8%.

Also of note, pending home sales for August fell 1.6%, which was better than the 2.3% decrease expected by the consensus. Today's reading followed last month's decrease of 1.3%.

Tomorrow, August personal income, personal spending and core PCE prices will be reported at 8:30 ET while the final reading of the September University of Michigan Consumer Sentiment Survey will be released at 9:55 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.