Day Traders Diary


The S&P 500 settled higher by 0.6%, notching its first advance of 2014. Despite today's gain, the index remains lower by 0.6% through the first four sessions of the year.
The benchmark index notched its high during the initial 90 minutes before spending the remainder of the session in a narrow range. Meanwhile, the Nasdaq (+1.0%) inched to a fresh high during the late afternoon.
Nine of ten sectors registered gains while materials (-0.2%) spent the day in negative territory. The sector was pressured by steelmakers with Market Vectors Steel ETF (SLX 47.63, -0.21) falling 0.4%.
Outside of materials, most of the remaining cyclical groups posted solid gains. The financial sector was an exception as Bank of America (BAC 16.50, -0.16), Goldman Sachs (GS 178.29, -1.08), and JPMorgan Chase (JPM 58.32, -0.68) weighed. Bank of America lost 1.0% after spiking 7.0% over the past three sessions while JPMorgan Chase fell 1.2% after announcing its settlement stemming from the Madoff case will reduce fourth quarter net income by roughly $850 million. For its part, Goldman Sachs settled lower by 0.6% after Societe Generale initiated the stock with a 'Sell' rating.
Elsewhere, the technology sector (+0.9%) finished among the leaders even as its top component, Apple (AAPL 540.04, -3.89), lost 0.7%, ending below its 50-day moving average. Other large-cap names picked up the slack as Google (GOOG 1138.86, +21.54) and Oracle (ORCL 37.85, +0.38) advanced 1.9% and 1.0%, respectively.
The outperformance of technology gave a boost to the Nasdaq, which also drew strength from biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 226.93, +3.11) jumped 1.4%. In turn, the health care sector (+1.0%) settled in the lead.
Other countercyclical groups held up fairly well as utilities (+0.9%) outperformed while consumer staples (+0.5%) and telecom services (+0.5%) settled just behind the S&P 500.
Treasuries registered modest gains as the 10-yr yield slipped one basis point to 2.95%.
Today's economic data was limited to the November trade deficit, which narrowed to $34.3 billion from a downwardly revised $39.30 billion (from $40.60 billion) while the consensus expected the deficit to come in at $40.40 billion. The decline in the trade deficit in November combined with the downward revision to the October data will likely boost our fourth quarter GDP estimates.
Unfortunately, most of the decline in the trade deficit was likely temporary. A large drop in petroleum-based demand was a catalyst for a significant contraction in imports. Meanwhile, a significant portion of export growth came from the unstable sales of civilian aircraft and aircraft engines.
Among news of note, the U.S. Senate approved Janet Yellen's nomination to lead the Federal Reserve with a 56.26 vote.
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while December ADP Employment Change will be reported at 8:15 ET. The FOMC minutes from the December meeting will be released at 14:00 ET and the day's data will be topped off with the Consumer Credit report, which will cross the wires at 15:00 ET.

DJIA -0.3% YTD
S&P 500 -0.6% YTD
Russell 2000 -0.6% YTD
Nasdaq -0.6% YTD

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