Day Traders Diary
5/19/14The stock market began the new trading week on a modestly higher note with small caps coming out on top. The Russell 2000 advanced 1.1%, while the S&P 500 added 0.4% with seven sectors posting gains. The underperformance of blue chip listings was apparent within the Dow Jones Industrial Average (+0.1%), which spent the entire session near its flat line.
Generally speaking, the first session of the week was largely uneventful with no economic data or noteworthy earnings influencing the sentiment. However, M&A activity was in focus early, even though it did not lift the underlying stocks. Some recent came to fruition as AT&T (T 36.38, -0.36) agreed to acquire DirecTV (DTV 84.65, -1.53) for $95 per share, which represents a 10.2% premium to Friday's closing price. However, shares of DirecTV did not rally amid concerns about potential regulatory hurdles.
Elsewhere, AstraZeneca (AZN 70.64, -9.64) plunged 12.0% after rejecting Pfizer's (PFE 29.28, +0.16) latest acquisition offer. Even though AstraZeneca lagged, the broader health care sector (+0.6%) was able to overcome that weakness thanks to the relative strength of biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 231.50, +3.20) gained 1.4% after starting the session right above its 200-day moving average, which has been an area of congestion for more than a month.
Also of note, the solid performance from the biotech group underpinned the Nasdaq Composite (+0.9%), which also received noteworthy support from the technology sector (+0.8%).
The top-weighted S&P 500 sector settled in the lead thanks to broad-based gains. Large cap listings like Apple (AAPL 604.59, +7.08), Google (GOOG 528.86, +8.23), and Oracle (ORCL 42.16, +0.47) advanced between 1.1% and 1.6%, while chipmakers also rallied. The PHLX Semiconductor Index finished higher by 1.1%.
Overall, cyclical sectors were responsible for the bulk of today's rally, while only one countercyclical grouphealth carefinished in the green. The other threeconsumer staples, telecom services, and utilitiesposted losses between 0.3% and 1.6%.
The utilities sector finished the session at the bottom of the leaderboard, which widened its May loss to 4.4%. Despite the sharp month-to-date decline, the rate-sensitive sector remains higher by 8.6% for the year.
Treasuries spent the entire session in a steady retreat from their overnight highs. As a result, the benchmark 10-yr yield climbed two basis points to 2.54%.
Participation was well below average with just 573 million shares changing hands at the NYSE, which represented the second lowest total of the year.
There is no economic data of note on tomorrow's schedule.
S&P 500 +2.0% YTD
Dow Jones Industrial Average -0.4% YTD
Nasdaq Composite -1.2% YTD
Russell 2000 -4.0% 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.