Day Traders Diary


After gaining nearly 30.0% in 2013, the S&P 500 exhibited a bit of a hangover in its first session of 2014. The benchmark index fell 0.9% as all ten sectors registered losses.
Stocks were pressured from the opening bell as cautious action in Europe weighed on the early sentiment. In all likelihood, the slide caught a number of participants off guard given the understanding that the first few days of a new year are known to have a favorable bias with inflows into IRA accounts, bonus money being put to work, and new money coming off the sidelines. That did not happen today as sellers maintained control throughout the trading day.
Three cyclical sectorsenergy (-1.3%), industrials (-1.3%), and technology (-1.1%)slipped behind the broader market at the open and their underperformance weighed for the remainder of the session.
The energy sector followed in the lead of crude oil as the energy component tumbled 3.0% to $95.49/bbl. Meanwhile, industrials were pressured by defense contractors and transports. The PHLX Defense Index lost 1.3% while The Dow Jones Industrial Average fell 1.5%.
Elsewhere, the technology sector struggled to gain traction as its largest component, Apple (AAPL 553.13, -7.89), weighed after Wells Fargo downgraded the stock to 'Market Perform' from 'Outperform.' Chipmakers also lagged, sending the PHLX Semiconductor Index lower by 1.4%.
Even though three large sectors pressured the broader market throughout the day, there was some relative strength in other heavily-weighted groups. On that note, consumer discretionary (-0.5%), financials (-0.6%), and health care (-0.6%) outperformed.
Notably, the financial sector owed some its outperformance to Bank of America (BAC 16.10, +0.53), which gained 3.4% after Citigroup upgraded the stock to 'Buy' from 'Neutral.' JPMorgan Chase (JPM 58.21, +0.11) also bucked the downtrend, climbing 0.2%
Treasuries rallied throughout the day as the benchmark 10-yr yield slid from 3.04% to 2.99%.
Trading volume was on the light side as just over 610 million shares changed hands on the floor of the New York Stock Exchange.
Today's economic data was limited to three reports, but neither had much of a trading impact:
Weekly initial claims dipped to 339,000 from an upwardly revised 341,000 (from 338,000) while the consensus estimate was pegged at 333,000. Notably, there was no indication from the Department of Labor that seasonal adjustments continued creating difficulties.
Construction spending in November rose 1.0% while the consensus expected an increase of 0.8%. The November gain followed an upwardly revised 0.9% increase (from 0.8%) in October. Total private construction, paced by a 1.9% increase in residential spending, was up 2.2% and led the overall advance. Nonresidential private spending jumped 2.7%, paced by gains in the commercial (+4.7%), office (+4.6%), power (+3.3%), and manufacturing (+1.2%) spaces.
The December ISM Index checked in at 57.0, which was pretty much in-line with the consensus estimate of 56.9. The December reading was the second highest reading for the year, trailing only the 57.3 reading seen in November.
There is no economic data on tomorrow's schedule.

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