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Leigh Baldwin & Co.

112 Albany Street, Cazenovia, NY 13035 | Phone: (315) 655-2964 Toll Free: 1-800-659-8044

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Day Traders Diary

7/29/14

The stock market ended the Tuesday session on a lower note after generally upbeat earnings took the back seat to geopolitical concerns. The S&P 500 (-0.5%) and Nasdaq Composite (-0.1%) ended on their lows, while the Russell 2000 (+0.3%) displayed relative strength.

Once again, market participants were focused on quarterly reports in the early going, but geopolitical worries overshadowed the impact of mostly better than expected earnings. Specifically, equities retreated after it was reported that European EU officials have prepared the new set of sanctions against Russia. The imposition of new sanctions may pique concerns about a boomerang effect on the global economy, and Europe in particular, but it is worth noting that the Russian ruble and Market Vectors Russia ETF (RSX 23.85, -0.50) strengthened in reaction to the news.

The reports of forthcoming sanctions were followed by afternoon headlines from Washington indicating the Treasury Department has added VTB, the Bank of Moscow, and Russian Agriculture Bank to the sanction list. After the news crossed the wires, the RSX and the ruble dropped to fresh lows, as did the S&P 500.

Nine of ten sectors registered losses with the industrial space (-1.2%) spending the day at the bottom of the leaderboard. The sector was pressured by transport stocks after UPS (UPS 98.86, -3.80) reported disappointing results and guided lower. For its part, the Dow Jones Transportation Average logged its fourth consecutive loss, tumbling 1.4% with 17 of its 20 components ending in the red.

Unlike the industrial sector, other cyclical groups fared a bit better. Financials (-0.6%) and materials (-0.7%) lagged, while consumer discretionary (-0.3%) and technology (-0.2%) displayed relative strength.

In the discretionary sector, Honda Motor (HMC 36.02, +0.84) advanced 2.4% after reporting a slim earnings beat. The carmaker underpinned the sector, which also drew strength from retailers. The SPDR S&P Retail ETF (XRT 84.24, 0.00) ended flat.

Elsewhere, the relative strength of the technology sector kept the broader market from sliding deeper into the red. High-beta chipmakers contributed to the outperformance with the likes of AMD (AMD 3.79, +0.06), Broadcom (BRCM 37.99, +0.27), and Taiwan Semiconductor (TSM 20.55, +0.18) adding between 0.7% and 1.6%.

Similarly, biotech companies also rallied with the iShares Nasdaq Biotechnology ETF (IBB 254.78, +2.87) ending higher by 1.1%. Meanwhile, the health care sector settled flat.

On the upside, only one sector finished in the green. Telecom services (+2.2%) rallied after Windstream (WIN 11.83, +1.30) was cleared by the Internal Revenue Service to spin off its assets into a publically-traded REIT. Peers AT&T (T 36.59, +0.94) and Verizon (VZ 51.97, +0.39) gained 2.6% and 0.8%, respectively on speculation they could also explore conversions into REITs.

On the fixed income side, Treasuries ended the session with modest gains that pressured the 10-yr yield lower by two basis points to 2.46%.

Participation was on the light side with 615 million shares changing hands at the NYSE.

Economic data was limited to the Case-Shiller 20-city Index and the Consumer Confidence report:
The Case-Shiller 20-city Home Price Index for May rose 9.3%, while a 10.0% increase had been expected by the Briefing.com consensus
This followed the previous month's increase of 10.8%
The Conference Board's Consumer Confidence Index spiked to 90.9 in July from an upwardly revised 86.4 (from 85.2), while the Briefing.com consensus pegged the Index at 85.6
Consumer confidence is now at its highest level since October 2007
The Present Situation Index increased to 88.3 from 86.3 and the Expectations Index rose to 92.7 from 86.4
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET, while the ADP Employment Change for July (Briefing.com consensus 215K) will be reported at 8:15 ET. The advance reading of Q2 GDP will be released at 8:30 ET (consensus 3.2%), while the FOMC will reveal its latest policy statement at 14:00 ET.

S&P 500 +6.6% YTD
Nasdaq Composite +6.4% YTD
Dow Jones Industrial Average +2.0% YTD
Russell 2000 -1.8% 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.