Day Traders Diary


The major averages ended the Wednesday session on a mixed note. The Nasdaq (+0.4%) and Russell 2000 (+0.3%) posted modest gains while the Dow Jones Industrial Average (-0.1%) finished in the red. For its part, the S&P 500 (+0.03%) settled just above its flat line.

Stocks began the day in the red, but spent the first two hours of action in a steady climb off their lows. The cautious start took place amid broad-based weakness across major European markets where Germany's DAX, Great Britain's FTSE, and France's CAC all posted losses close to 1.0% apiece.

In addition to the weakness in Europe, losses among major Asian indices also weighed on the early sentiment. On that note, markets in Japan, South Korea, and Hong Kong fell 2.6%, 1.7%, and 1.7%, respectively, while China's Shanghai Composite (-0.2%) outperformed.

Even though China was an area of relative strength, jitters regarding the health of the country's financial system remained palpable. Copper futures continued yesterday's tumble overnight, but were able to regain those losses in the morning. The red metal added one cent, ending at $2.961/lb.

Although copper did not send the same warning signal as yesterday, gold futures and Treasuries reflected a measure of caution. Gold jumped 1.8% to $1370.60/ozt while Treasuries climbed steadily, ending on their highs. Bolstered by a solid 10-yr reopening, the benchmark note added 14 ticks, sending its yield lower by five basis points to 2.72%. The retreat in Treasury yields, gave a boost to the rate-sensitive utilities sector (+1.3%), which was the top performer among the 10 sectors.

Six of ten groups ended in the red while technology (+0.2%), energy (+0.04%), and consumer staples (+0.1%) fared a bit better than the broader market.

Technology drew strength from chipmakers (PHLX Semiconductor Index +0.9%) while the energy sector was underpinned by Chevron (CVX 115.65, +1.14). The stock rallied 1.0% after being added to the US Focus List at Credit Suisse. The staples sector benefitted from gains among food producers.

While the broader market did not move much during afternoon action, the same could not be said for shares of Herbalife (HLF 60.57, -4.82), which fell 7.4% after the company received a Civil Investigative Demand from the Federal Trade Commission. Herbalife responded to the notice, saying they welcome the inquiry due to 'tremendous amount of misinformation in the marketplace.'

Also of note, the daylong underperformance of three influential sectorsconsumer discretionary (-0.1%), financials (-0.1%), and industrials (-0.2%)kept the S&P 500 from pulling away from its flat line. Notably, the discretionary sector was pressured by apparel retailers after Express (EXPR 16.05, -2.19) missed on earnings and lowered its guidance well below analyst estimates. The stock plunged 12.0%.

Participation was on the light side with 646 million shares changing hands at the NYSE floor.

Another item of note that remained on the backburner, but has the potential to make a quick return to the forefront is the situation in Crimea.

This morning, Polish Prime Minister Donald Tusk and German Chancellor Angela Merkel held a joint press conference, announcing the European Union will sign parts of an association deal with Ukraine next week. In addition, Chancellor Merkel said the EU is set to impose additional sanctions on Moscow after Russian officials chose not to take part in a diplomatic contact group. This comes ahead of Sunday's referendum on Crimea joining the Russian Federation. With the referendum nearing, U.S. Secretary of State John Kerry will be in London tomorrow in hopes of meeting with Russian Foreign Minister Sergei Lavrov.

As the session drew to its close, President Obama, who met with Ukraine's acting Prime Minister Arseniy Yatseniuk in Washington, said 'We will stand with Ukraine and consider Russian incursion into Crimea against the law'

Economic data was limited to the weekly MBA Mortgage Index, which fell 2.1% to follow last week's increase of 9.4%.

Tomorrow, weekly initial claims, February retail sales, and February import/export prices will be released at 8:30 ET while January business inventories will cross the wires at 10:00 ET. The day's data will be topped off with the 14:00 ET release of the February Treasury budget, which was originally scheduled for today.

"Nasdaq Composite +3.5% YTD
"Russell 2000 +2.7% YTD
"S&P 500 +1.1% YTD
"Dow Jones Industrial Average -1.4% YTD

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