Day Traders Diary
7/14/14The major averages started the new trading week on an upbeat note, but the bulk of the action on Monday took place at the start of the session. The S&P 500 rose 0.5% with nine sectors registering gains, while the Dow Jones Industrial Average (+0.7%) outperformed. For its part, the small-cap Russell 2000 (+0.5%) settled in the middle of its trading range after showing relative strength at the start.
Equity indices received an opening boost from the financial sector (+0.6%), which in turn, was underpinned by Citigroup (C 48.42, +1.42) after the bank reported its earnings. Shares of Citigroup jumped 3.0% in reaction to above-consensus results that excluded the impact of a $3.8 billion charge stemming from settlements related to RMBS and CDO-related claims. The financial sector, meanwhile, spent the entire session in a steady retreat from its early high.
Although financials slipped from their opening levels, that void was filled by other influential sectors like energy (+0.9%) and technology (+0.8%).
The top-weighted S&P 500 sectortechnologyrallied on the back of its largest components. Apple (AAPL 96.45, +1.23), Google (GOOGL 594.26, +7.61), Facebook (FB 67.90, +1.56), and IBM (IBM 189.87, +1.87) gained between 1.0% and 2.4% to name a few. However, chipmakers were not as strong with the PHLX Semiconductor Index tacking on 0.4%.
Elsewhere, the energy sector was boosted by M&A activity, while crude oil ended the session little changed at $100.99/bbl. On the acquisition front, Kodiak Oil & Gas (KOG 14.91, +0.68) rose 4.8% after agreeing to be acquired by Whiting Petroleum (WLL 84.58, +6.04) for $6 billion.
The energy sector was not the only source of M&A news as industrials (+0.6%) and health care (+0.4%) also benefitted from deals.
Among industrials, URS (URS 58.40, +6.38) surged 12.3% after agreeing to be acquired by Aecom (ACM 34.98, +3.22) for $56.31 per share. Furthermore, defense contractors and transports also displayed relative strength with the PHLX Defense Index and the Dow Jones Transportation Average both adding 0.7%.
On the countercyclical side, health care was limited to a gain of 0.4% even though Shire Pharmaceuticals (SHPG 254.27, +5.21) jumped 2.1% on reports it will accept a $53 billion takeover bid from AbbVie (ABBV 54.85, -0.11). Also of note, Mylan (MYL 51.24, +1.04) struck a $5.3 billion deal to purchase Abbott's (ABT 41.82, +0.52) non-US developed markets specialty and branded generics business.
Similar to health care, other countercyclical sectors also ended behind the broader market. Consumer staples (+0.4%) and telecom services (+0.3%) posted modest gains, while the utilities sector lost 1.2%.
Treasuries ended near their lows with the 10-yr yield up two basis points at 2.54%.
Participation was well below average as less than 600 million shares changed hands at the NYSE.
Tomorrow, the Retail Sales report for June (Briefing.com consensus 0.7%), June import/export prices, and the July Empire Manufacturing survey (consensus 13.2) will be released at 8:30 ET, while the Business Inventories report for May (consensus 0.6%) will cross the wires at 10:00 ET. Also of note, Fed Chair Janet Yellen will appear before the Senate Banking Committee to provide her semiannual testimony on the economy and monetary policy.
S&P 500 +7.0% YTD
Nasdaq Composite +6.3% YTD
Dow Jones Industrial Average +2.9% YTD
Russell 2000 +0.2% 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.