Day Traders Diary


Equity indices enjoyed a broad-based rally on Tuesday that sent the S&P 500 (+1.5%) and the Russell 2000 (+2.7%) to new closing record highs.

Stocks surged out the gate after index futures received a considerable bid around 1:00AM ET. The overnight strength came about after it was reported that Russian President Vladimir Putin called back the troops that were conducting exercises on the country's border with Ukraine. Mr. Putin commented on the tense situation, saying Russia is not aiming to annex the Crimean peninsula and that military force is a choice of last resort.

Mr. Putin's comments were followed by a response from Secretary of State John Kerry who visited Kiev today. Secretary Kerry called on Russia to refrain from using force and said the United States is not seeking a confrontation, but if Russia does not deescalate, then the U.S. will be forced to increase pressure on Russia. Less than 30 minutes after the comments from Secretary Kerry, Russia's Foreign Ministry said the introduction of any potential sanctions will be met with a response that is "not necessarily symmetrical."

The overnight developments were viewed positively by market participants who rushed into risk while shedding some of the safe-haven assets that were in strong demand yesterday:
Treasuries spent the entire session in a steady retreat with the 10-yr yield ending at its session high (+9 bps at 2.69%);
Gold futures fell 0.9% to $1337.80/ozt; and
Crude oil lost 1.6%, ending at $103.34/bbl.
In turn, the risk rally translated into solid gains for all ten sectors. The three largest S&P 500 groups-financials (+2.0%), technology (+1.5%), and health care (+1.9%)-paced the advance while most of the remaining groups added at least 1.0% with utilities (+0.8%) as the lone exception.

Elsewhere, industrials (+1.7%) also factored into the advance thanks to big gains among transports. All 20 members of The Dow Jones Transportation Average (+2.2%) finished in the green with airlines and railroads blazing the trail. Union Pacific (UNP 183.85, +4.34) and Delta Air Lines (DAL 34.45, +1.86) settled higher by 2.4% and 5.7%, respectively.

Although stocks spent the entire session in a steady push to new highs, a brief dip took place in the afternoon amid reports indicating Russia tested an intercontinental ballistic missile in the Astrakhan region. While the initial headline lacked detail, subsequent reports indicated the test was planned in accordance with international laws and that U.S. officials received an early notice.

The afternoon reports did not derail the rally, allowing the S&P 500 to settle just below its best level of the day.

Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while the February ADP Employment Change will be announced at 8:15 ET. The ISM Services report for February will cross the wires at 10:00 ET while the Federal Reserve will release its March Beige Book at 14:00 ET.

Nasdaq Composite +4.2% YTD
Russell 2000 +3.9% YTD
S&P 500 +1.4% YTD
Dow Jones Industrial Average -1.1% YTD

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