Day Traders Diary


The major averages posted modest Friday gains, but the advance was not strong enough to pull the key indices back into the green for the week. The S&P 500 added 0.3%, narrowing its weekly loss to 0.7%, while the Nasdaq (+0.3%) ended the week lower by 0.3%.

The tech-heavy Nasdaq outperformed in the morning thanks to early strength among chipmakers and high-beta listings. The strength in microchip manufacturers resulted from upbeat sales and gross margin guidance issued by Intel (INTC 29.87, +1.91). The largest chipmaker soared 6.8%, while the 30-stock PHLX Semiconductor Index added 1.0%.

In addition, the index was also boosted by high-growth stocks after (PCLN 1189.30, -36.70) agreed to acquire OpenTable (OPEN 104.48, +34.05) for $103/share, representing a 46.2% premium. The news also stirred takeover speculation around the likes of GrubHub (GRUB 36.00, +2.35) and Yelp (YELP 74.92, +9.08). The two names surged 7.0% and 13.8%, respectively.

Accordingly, the technology sector (+0.7%) finished in a position of relative strength, but the largest S&P 500 group ceded its top spot to the energy space (+1.0%) during afternoon action. Meanwhile, other heavily-weighted sectors like consumer discretionary (unch), financials (unch), and health care (unch) could not keep up.

The energy sector was underpinned by top components Chevron (CVX 127.26, +1.15) and ExxonMobil (XOM 102.65, +0.99), while crude oil added 0.3% ($106.86/bbl). The sector was the only group that ended the week on a higher note (+1.7%) with the advance supported by a 4.1% gain in crude oil amid continued tensions in Iraq.

During the early afternoon, President Obama addressed the volatile situation in Iraq where a breakaway militant group of Al-Qaeda has taken control of parts of the country. Mr. Obama said that he will review his options over the coming days, but any potential U.S. action will have to be supported by the leaders of Iraq.

The sharp rise in oil prices over this week weighed on transport stocks, but the Dow Jones Transportation Average (+0.8%) bounced today after falling nearly 3.0% between Monday's close and today's opening bell. In turn, the strength underpinned the industrial sector (+0.4%).

Like the six cyclical sectors, countercyclical groups ended on a mixed note. Consumer staples (unch) and health care (unch) underperformed, while telecom services (+0.5%) and utilities (+0.7%) posted gains.

Treasuries registered slim losses with the 10-yr yield climbing one basis point to 2.60%.

Light participation continued plaguing the market with just over 560 million shares changing hands at the NYSE.

Economic data was limited to May PPI and the latest Michigan Consumer Sentiment survey:
"The Producer Price Index for May declined 0.2%. That was lower than the consensus estimate, which called for an increase of 0.6%. The downturn in May was attributed to a 0.2% decline in the indexes for final demand services and final demand goods. Excluding food and energy, core PPI declined 0.1%, which was also lower than the 0.1% increase projected by the consensus estimate. Notably, there weren't any strong indications of pipeline pricing pressures. Within intermediate demand, prices for processed goods fell by 0.1%, the index for unprocessed goods was unchanged, and prices for services declined by 0.4%.
"The preliminary reading for the University of Michigan Consumer Sentiment report for June dipped to 81.2 from the final reading of 81.9 for May. The June figure was the lowest reading since March and it fell short of the consensus estimate, which was pegged at 82.9. The shortfall was not a major deviation, yet it still qualifies as a disappointment when taking into account that stock markets were generally behaving well and employment conditions were improving during the survey period.
On Monday, the Empire Manufacturing survey for June ( consensus 12.8) will be released at 8:30 ET, while April Net Long-Term TIC Flows will cross the wires at 9:00 ET. In addition, May Industrial Production (consensus 0.5%) and Capacity Utilization (consensus 78.9%) will be announced at 9:15 ET, while the NAHB Housing Market Index for June (consensus 46) will be reported at 10:00 ET.
"S&P 500 +4.8% YTD
"Nasdaq Composite +3.2% YTD
"Dow Jones Industrial Average +1.2% YTD
"Russell 2000 -0.2% YTD

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