Day Traders Diary


Equities posted modest losses, ending near their lows, with the tech-heavy Nasdaq shedding 0.4% to pace the decline. The S&P 500 slipped 0.2% while the Dow Jones Industrial Average edged down 0.1%.
Stocks displayed some strength during the opening hour as an early bid catapulted the Dow above the 16,000 level for the second day in a row. The early gain in the Dow was aided by Home Depot (HD 80.38, +0.71), which reported better-than-expected earnings while raising its full-year guidance above analyst expectations. The price-weighted index also received significant support from Chevron (CVX 122.06, +1.50) and Goldman Sachs (GS 166.60, +0.92) while their respective sectorsenergy (+0.2%) and financials (+0.2%)ended in the lead. However, the rally fizzled out as the underperformance of industrials (-0.7%) weighed.
The sector ended behind the remaining cyclical groups with truckers and railroads pressuring the Dow Jones Transportation Average to a loss of 1.0%. Airlines withstood the bulk of the selling as United Continental (UAL 37.80, +1.42) surged 3.9% after announcing plans to cut costs by $2 billion per year.
Elsewhere, the discretionary sector (-0.4%) lagged as the outperformance of Home Depot was not enough to offset the losses among apparel retailers. Meanwhile, electronics retailer Best Buy (BBY 38.78, -4.78) endured a rough session, tumbling 11.0% after the company said it will aim to match or beat its competition at the expense of maximum profitability during the holiday quarter.
Similar to yesterday, the Nasdaq registered a larger decline than the broader market as chipmakers displayed broad weakness. The PHLX Semiconductor Index lost 1.3%.
Momentum names were mixed as (PCLN 1118.42, -9.51) lost 0.8% while Tesla (TSLA 126.09, +4.51) gained 3.7%, rebounding from yesterday's 10.2% loss. Today's bid took place after the stock had suffered a 37.0% drop off its October 1 high, and despite the National Highway Traffic Safety Administration announcing it will investigate the Model S after three vehicles caught fire after striking roadside debris.
With regard to countercyclical groups, health care (+0.1%) and telecom services (+0.1%) outperformed while consumer staples (-0.4%) and utilities (-0.7%) lagged. Notably, the staples sector was pressured by Campbell Soup (CPB 39.20, -2.61), which plunged 6.2% after missing earnings estimates by 23 cents and issuing disappointing guidance.
Treasuries finished near their lows with the benchmark 10-yr yield up four basis points at 2.71%.
Participation was on the light side as 646 million shares changed hands on the floor of the New York Stock Exchange.
Today's economic data was limited to the third quarter employment cost index, which increased 0.4%, down from a 0.5% increase in the second quarter. The consensus expected the index to increase 0.5%. Year-over-year, compensation increased 1.9%. Wages and salaries increased 0.3% in the third quarter. That is down from a 0.4% increase in the second quarter and the weakest gain since increasing by the same amount in Q4 2012.
Tomorrow will be busy in terms of economic data with the MBA Mortgage Index and October retail sales set to be reported at 7:00 ET and 8:30 ET, respectively. October CPI will also be reported at 8:30 ET while September business inventories and October existing home sales will be released at 10:00 ET. The day will be topped off with the 14:00 ET release of the FOMC Minutes from the October meeting.

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