Day Traders Diary


The S&P 500 jumped 2.2%, turning its October loss into a gain of 0.7%. The Nasdaq outperformed, advancing 2.3%, but the tech-heavy index remains lower by 0.3% for the month.

Equities registered the bulk of their gains at the open amid indications the budget stalemate may be getting a bit closer to a resolution. Participants rushed into equities after House Republicans proposed extending the debt limit by six weeks in order to allow for a broader discussion on spending. Currently, the Republican plan does not call for ending the partial government shutdown, which was met with an initial pushback from the White House. However, subsequent reports from the White House suggested President Obama 'may' consider the short-term proposal.

As a result of today's rally, the S&P managed to regain both its 50- and 100-day moving averages.

All ten sectors registered solid gains with financials (+2.9%) ending in the lead. The sector outperformed for the second consecutive session as JPMorgan Chase (JPM 52.52, +1.77) and Wells Fargo (WFC 41.44, +1.08) settled with respective gains of 3.5% and 2.7%. The two banks are scheduled to report their quarterly results ahead of tomorrow's opening bell.

Elsewhere, the industrial sector advanced 2.7% as defense contractors (PHLX Defense Index +3.1%) and transports (DJ Transportation Average +2.3%) rallied.

Also of note, the Nasdaq outperformed as biotech companies rallied after seeing sharp losses earlier in the week. The iShares Nasdaq Biotechnology ETF (IBB 201.47, +6.97) spiked 3.6%, but is still off 5.2% this week.

The relative strength of biotech helped the health care sector (+2.3%) end ahead of the broader market while the remaining countercyclical groups (consumer staples, telecom services, and utilities) underperformed with gains between 1.4% and 1.9%.

Treasuries ended with slim losses as the benchmark 10-yr yield rose three basis points to 2.69%.

Trading volume was in-line with average as 738 million shares changed hands on the floor of the NYSE.

In today's economic data, weekly initial claims increased to 374,000 from 308,000 with much of the increase being attributed to California paring down their sizable backlogs in applications after computer glitches in September impeded the normal processing of initial claims. That resulted in a temporary drop in initial claims. Those claims were finally filed properly this week, which resulted in a large upward spike in claims.

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