Day Traders Diary


The S&P 500 settled higher by 0.6%, snapping its four-day losing streak. Despite today's gain, the benchmark index remains lower by 1.1% in December.
The bulk of today's advance occurred shortly after the open as the Dow, Nasdaq, and S&P 500 notched their highs during the initial 30 minutes. Small-caps were a notable exception as the Russell 2000 (+1.2%) climbed throughout the day, trimming its month-to-date loss to 2.0%.
Nine of ten sectors registered gains with cyclical groups maintaining their lead throughout the session. The energy sector (+1.0%) displayed strength from the open after its largest component, Exxon Mobil (XOM 97.22, +1.91), was upgraded to 'Buy' from 'Neutral' at Goldman Sachs. Crude oil, which added 0.9% to $97.47/bbl, also played a part in the sector's strength.
Elsewhere, the industrial sector (+1.0%) assumed the lead in afternoon trade as defense contractors and transports rallied. The PHLX Defense Index settled higher by 1.2% while the Dow Jones Transportation Average climbed 0.9%.
Although heavily-weighted financials (+0.6%) and health care (+0.2%) were a bit tentative in today's advance, the largest S&P 500 sector, technology (+1.0%) picked up the slack. The sector received support from chipmakers after Avago (AVGO 50.10, +4.45) agreed to acquire LSI Logic (LSI 10.96, +3.05) for $11.15 per share. The broader PHLX Semiconductor Index ended higher by 1.3%.
Even though equities registered solid gains, all ten sectors remain in the red for the month. Countercyclical consumer staples, health care, telecom services, and utilities are down between 1.0% and 2.7% in December while losses among cyclical groups are limited to no more than 1.2% (consumer discretionary and financials).
Despite today's advance, the CBOE Volatility Index (VIX 16.06, +0.30) climbed for the fourth session in a row, ending at a two-month high.
Treasuries registered modest losses as the 10-yr yield ticked up one basis point to 2.88%.
Today's participation was on the light side as only 669 million shares changed hands on the floor of the New York Stock Exchange.
On the economic front, revised productivity data for the third quarter showed an increase of 3.0%, which was above the 2.7% increase that had been expected by the consensus. Unit labor costs for the third quarter were revised lower to reflect a decrease of 1.4% (from -0.6%). The consensus expected the reading to reflect a decrease of 1.3%.
Separately, the Empire Manufacturing Survey for December registered a reading of 1.0, which was up from the prior month's reading of -2.2. However, the reading came in below the 5.0 expected by the consensus.
November industrial production increased 1.1% while the consensus expected an uptick of 0.4%. Meanwhile, capacity utilization hit 79.0%, which was better than the 78.4% expected by the consensus.
Lastly, the October net long-term TIC flows report reflected an inflow of $25.5 billion into U.S. denominated assets. This followed the prior month's $25.5 billion inflow.
Tomorrow, November CPI, core CPI, and the third quarter current account balance will all be reported at 8:30 ET. Separately, the NAHB Housing Market Index for December will be released at 10:00 ET.

Nasdaq +33.5% YTD
Russell 2000 +31.9% YTD
S&P 500 +25.3% YTD
DJIA +21.2% YTD

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