Day Traders Diary


The 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 ( 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

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