Day Traders Diary


The stock market finished the Tuesday session on a modestly lower note, but small-cap stocks underperformed once again. The Russell 2000 slipped 0.2%, while the S&P 500 snapped its three-day win streak, shedding less than a point.
Equity indices faced an uphill climb from the opening bell, but the S&P 500 was able to cut the bulk of its losses during the initial 45 minutes of action; however, the early rebound attempt was stonewalled by the underperformance of small-caps. With high-beta names unable to gain any significant traction, the benchmark index returned to its earlier low. The S&P 500 then staged another recovery, which placed it right below its flat line by the close.
To be sure, the (nearly) flat finish reflected a lack of concerted sector leadership during the trading day. On the cyclical side, energy (+0.3%) and financials (+0.1%) posted modest gains, while the remaining four sectors lost between 0.1% and 0.3%.
Interestingly, the industrial sector (-0.2%) settled just behind the broader market, masking the relative weakness among transport stocks. The Dow Jones Transportation Average fell 0.8%, but that was likely a function of some profit taking after the bellwether complex surged 3.1% over the past two weeks. Airlines were able to withstand the selling pressure as four of five carriers posted gains with JetBlue Airways (JBLU 10.05, +0.23) leading the way. The stock advanced 2.3%.
Elsewhere, the four countercyclical groups finished mixed with health care (+0.2%) and utilities (+0.3%) posting slim gains, while consumer staples (-0.3%) and telecom services (-1.0%) ended in the red.
The somewhat sloppy session lured some investors into demanding portfolio insurance, which sent the CBOE Volatility Index (VIX 11.79, +0.21) higher by 1.8%. Despite the uptick, the near-term volatility measure ended the day not far above its 2014 low (11.29%), which was notched yesterday.
Even though volatility protection was in demand, the safety of the Treasury market was not. On that note, the 10-yr note spent the session in a steady retreat, falling 19 ticks, which sent its yield higher by seven basis points to 2.60%.
Today's participation marked an improvement from recent days, but remained below average as 644 million shares changed hands at the NYSE floor.
Economic data was limited to April factory orders, which increased 0.7% following an upwardly revised 1.5% (from 1.1%) increase in March. The consensus expected an increase of 0.5%.
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET, while the ADP Employment Change for May ( consensus 200,000) will cross the wires at 8:15 ET. The April Trade Balance (consensus -$41.30 billion) and Q1 Productivity (consensus -2.5%) and Unit Labor Costs (consensus 4.8%) will be reported at 8:30 ET, while the May ISM Services Index (consensus 55.5) will be released at 10:00 ET. The day's data will be topped off with the 14:00 ET release of the Fed's Beige Book for June.

S&P 500 +4.1% YTD
Dow Jones Industrial Average +0.9% YTD
Nasdaq Composite +1.4% YTD
Russell 2000 -3.1% YTD

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