Day Traders Diary
3/27/14The stock market finished the Thursday session on a lower note with the tech-heavy Nasdaq Composite (-0.5%) trailing the other indices once again. The Nasdaq widened its week-to-date loss to 3.6% while the S&P 500 settled lower by 0.2%, extending its weekly decline to 0.9%.
Equity indices began the trading day on a cautious note despite two upbeat economic data points crossing ahead of the open. Namely, fourth quarter GDP was revised up to 2.6% from 2.4% while weekly initial claims fell to 311,000 from 320,000.
The release of this morning's data coincided with session lows in Treasuries, which rallied into the afternoon. The 10-yr note added three ticks, pressuring its yield down to 2.68% after notching a morning high at 2.71%.
Meanwhile, the early weakness in equities was brought upon by continued volatility in the biotechnology space. The iShares Nasdaq Biotechnology ETF (IBB 236.14, +1.05) was down nearly 3.0% during the initial 30 minutes of action before returning to its flat line, where it traded for the remainder of the trading day.
The early selling in biotechnology pressured the health care sector (-0.1%), but the influential group was able to erase the bulk of its early loss thanks in part to the 3.9% gain in the shares of Baxter (BAX 72.80, +2.72) after the company announced plans to split into two entities.
Even though health care settled in-line with the broader market, other top-weighted sectors were not as fortunate. Financials (-0.6%) ended at the bottom of the leaderboard while consumer discretionary (-0.5%) and technology (-0.6%) were not much stronger.
Notably, the financial sector lagged amid losses in some of its largest components. Citigroup (C 47.45, -2.71) slumped 5.4% after the Federal Reserve objected to the capital plan submitted by the bank.
Elsewhere, the discretionary sector was pressured by the likes of Amazon.com (AMZN 338.47, -4.94), eBay (EBAY 55.18, -0.42), and Netflix (NFLX 364.18, -8.10), while quick-service restaurants also finished mostly lower. Yum! Brands (YUM 73.20, -0.97) was a notable laggard, falling 1.3%.
Although most cyclical groups spent the bulk of the session in the red, that was not the case with the energy space (+0.9%), which outperformed throughout the day while crude oil rose 1.0% to $101.24/bbl.
On the countercyclical side, telecom services (+1.2%) and utilities (+0.8%) posted gains while consumer staples (-0.2%) ended in-line.
Despite the cautious disposition, participants did not show strong demand for volatility protection, sending the CBOE Volatility Index (VIX 14.56, -0.37) lower by 2.5%.
Trading volume was a bit above average as 778 million shares changed hands at the NYSE.
Today's economic data included the final revision to Q4 GDP, weekly initial claims, and the February Pending Home Sales report:
Fourth quarter GDP was revised up to 2.6% in the third estimate from 2.4% in the second estimate. That matched the Briefing.com consensus estimate, but was down from a 4.1% gain in Q3 2013. Real final sales increased 2.7% in the fourth quarter. That was up from a 2.5% gain in Q3 2013 and above the previously reported 2.3% gain. It was also the strongest increase in real final sales since increasing 3.4% in Q2 2012. Looking at real final sales over the last four quarters (0.2%, 2.1%, 2.5%, and 2.7%), there is a definite upward moving trend. The year-over-year averages, however, put it below the 2.0% and 2.6% gains from 2011 and 2012.
The initial claims level fell to 311,000 for the week ending March 22 from an upwardly revised 321,000 (from 320,000) for the week ending March 15. The Briefing.com consensus expected the initial claims level to increase to 330,000. Over the past several months, excluding some seasonal volatility, the initial claims have been bounded between 330,000 and 340,000. That trend seems to have shifted lower over the past four weeks, with the initial claims level consistently falling below 330,000 and in the range of 310,000--320,000.
Pending home sales for February fell 0.8%, which was worse than the 0.2% decrease forecast by the Briefing.com consensus. Today's reading followed last month's revised decrease of 0.2% (from +0.1%).
Tomorrow, February Personal Income (Briefing.com consensus +0.2%), Personal Spending (consensus +0.3%), and Core PCE Prices (consensus +0.1%) will be released at 8:30 ET while the final reading of the March Michigan Sentiment survey (consensus 80.0) will cross the wires at 9:55 ET.
S&P 500 UNCH YTD
Nasdaq Composite -0.6% YTD
Russell 2000 -0.8% YTD
Dow Jones Industrial Average -1.9% YTD All comments contained herein are for informational purposes only, and should not be considered as a solicitation to buy or sell any security. The firm does not guarantee the accuracy or completeness of the information or make any warranties regarding results from it's usage.