Day Traders Diary


Equity indices finished the Thursday session on an upbeat note with the S&P 500 settling above its 2013 closing high of 1848.36 after three unsuccessful attempts.

Stocks climbed throughout the session despite starting the day on a cautious note. The early weakness could be traced to European markets, which were pressured by news of renewed tensions in the pro-Russian region of Crimea in Southern Ukraine.

The developments weighed on European equities and contributed to a risk-off sentiment in the foreign exchange market where the yen strengthened notably against all major currencies. The dollar/yen pair fell as low as 101.70, which fueled worries about forced unwinds of yen-based carry trades.

Those worries were calmed by a rebound that sent the currency pair to a session high of 102.20. Meanwhile, the stock market began the trading day on a flat note and continued climbing throughout the day.

Participants heard from Fed Chair Janet Yellen today, but Ms. Yellen struck a familiar tone during her appearance before the Senate Banking Committee.

The Fed Chair did not provide any startling insights, which seemed to sit well with the market. To that end, the market didn't need her to sound outright dovish, just not clearly hawkish. She reiterated that further assessment time is necessary to determine what type of impact the severe winter weather has had on the economy and reminded her listeners that asset purchases are not on a preset course.

Eight of ten sectors ended in the green while energy (-0.01%) and utilities (-0.3%) posted modest losses.

On the upside, telecom services (+1.7%) outperformed notably thanks to a 2.5% gain in Verizon (VZ 47.50, +1.15), which rallied after being added to JPMorgan's Focus List.

The telecom sector was followed by materials (+0.7%) and technology (+0.7%). The materials sector drew strength from steelmakers as the Market Vectors Steel ETF (SLX 45.73, +0.65) gained 1.4%.

Meanwhile, the tech sector received significant support from its top component, Apple (AAPL 527.67, +10.32), which gained 2.0%. Despite Apple's strength, other large tech names did not fare as well. Cisco Systems (CSCO 21.92, -0.01), Google (GOOG 1219.21, -0.96), Qualcomm (QCOM 75.19, +0.14), and Intel (INTC 24.76, -0.04) were all little changed.

Elsewhere among influential groups, health care (+0.5%) and financials (+0.6%) ended in-line or just ahead of the broader market.

Strikingly, Treasuries also finished the session on their highs with the benchmark 10-yr yield down two basis points at 2.65%.

Participation was a bit below average as 683 million shares changed hands at the NYSE.

Economic data was limited to weekly initial claims and durable orders for January:
Initial claims increased to 348,000 from a downwardly revised 334,000 (from 336,000) while the consensus pegged the initial claims level at 335,000. We had anticipated that the initial claims level would hold between 330,000 and 340,000 for the next several weeks. The increase in claims obviously exceeded this range, but we are not concerned. While the Department of Labor stated that there was nothing unusual in the claims data, the DoL has had extreme difficulties accounting for holiday-shortened weeks with their seasonal adjustment factors. It was likely that the Presidents' Day holiday negatively impacted the seasonal adjustments last week.
Regarding durable goods, orders fell 1.0% in January after declining a downwardly revised 5.3% (from -4.2%) in December. The consensus expected durable goods orders to fall 1.0%. A big drop in aircraft orders (-7.2%) pulled overall transportation demand down 5.6%. Excluding transportation, orders increased 1.1% after falling a downwardly revised 1.9% (from -1.3%) in December. The consensus expected these orders to decline 0.2%.
Tomorrow, the second estimate of Q4 GDP will be released at 8:30 ET while the Chicago PMI for February will cross the wires at 9:45 ET. The final reading of the Michigan Sentiment survey for February will be reported at 9:55 ET while the Pending Home Sales report for January will be released at 10:00 ET.

Nasdaq Composite +3.4% YTD
Russell 2000 +2.3% YTD
S&P 500 +0.3% YTD
Dow Jones Industrial Average -1.8% YTD

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