Day Traders Diary


The stock market ended the Tuesday session on a broadly lower note. The S&P 500 lost 1.0% with all ten sectors ending in the red. The Russell 2000 outperformed, but still shed 0.3%.

Equity indices were on the defensive from the get-go with the early weakness attributed to disappointing data from overseas. China got the ball rolling overnight with a disappointing HSBC Services PMI report (50.0 from 53.1), which fell to its lowest level on record. Things looked a little bit better in Europe, where Services PMI readings from Germany, Great Britain, and Spain improved, but the overall eurozone reading unexpectedly slipped to 54.2 from 54.4.

Another item that kept dip-buyers on the sidelines was disappointing guidance provided by Target (TGT 58.03, -2.67). The retailer lost 4.4% after priming the market for below-consensus results that will include a $148 million expense stemming from the data breach that occurred last year.

Staying on the earning theme, apparel retailer Coach (COH 35.80, +1.49) rallied 4.3% after reporting better than expected earnings and revenue. For its part, the overall consumer discretionary sector (-0.7%) ended a bit ahead of the broader market.

Outside of the discretionary space, the industrial sector (-0.6%) was the only other cyclical group that was able to finish ahead of the broader market. Dow component Boeing (BA 121.27, +1.34) added 1.1%, which contributed to the relative strength. Transport stocks were not as fortunate with the Dow Jones Transportation Average falling 1.1%.

Other heavily-weighted sectors were not as fortunate with financials (-1.0%) and technology (-0.9%) ending in line with the S&P 500, while energy (-2.1%) lagged throughout the session. Pioneer Natural Resources (PXD 209.98, -12.43) pressured the sector, falling 5.6%, in reaction to below-consensus revenue. Marathon Oil (MRO 38.46, -0.76) also slumped, losing 1.9%, despite its better than expected earnings. Crude oil, meanwhile, fell 1.0% to $97.33/bbl.

Afternoon action saw equities extend their losses with the slide attributed to comments from Polish Foreign Minister Radoslaw Sikorski, who said Russia is poised to pressure or invade Ukraine. However, it is worth noting that the comments did not introduce anything new as Russian troop movements along the border with Ukraine have been watched for months. In all likelihood, the headline was a convenient excuse to take some money off the table after the market could not erase its early loss.

Also of note, the afternoon remarks helped Treasuries recover their intraday losses. The 10-yr note ended flat with its yield at 2.48% after the benchmark yield notched a session high just north of 2.52%.

Participation was a bit below average with fewer than 690 million shares changing hands at the NYSE.

Economic data was limited to Factory Orders and the ISM Services Index:
"Factory orders increased 1.1% in June following a downwardly revised 0.6% decline (from -0.5%) in May "The consensus expected factory orders to increase 0.5%
"Durable goods orders increased 1.7% in June after declining 0.9% in May, representing a significant upward revision from the advance release (+0.7%)
"Excluding transportation, durable goods orders rose 1.9% in June, up from an originally reported 0.8% increase in the advance release

"The ISM Non-manufacturing Index increased to 58.7 in July from 56.0, while the consensus expected an increase to 56.5 "That was the highest reading since the ISM reformulated the index in January 2008 "Including the old survey methods, the index reached its highest level since late 2005

Tomorrow, the weekly MBA Mortgage Index will be reported at 7:00 ET, while the June Trade Balance ( consensus -$45.20 billion) will be released at 8:30 ET.
"S&P 500 +3.9% YTD
"Nasdaq Composite +4.2% YTD
"Dow Jones Industrial Average -0.9% YTD
"Russell 2000 -3.5% 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.