Day Traders Diary


The major averages stumbled on Tuesday with the Russell 2000 pacing the slide. The small-cap index lost 0.7%, while the S&P 500 (-0.2%) gave back most of its advance from yesterday. For its part, the Dow Jones Industrial Average (-0.1%) ended with a slim loss.

Equity indices spent the first hour of action near their flat lines after index futures slumped from their overnight highs shortly ahead of the cash open. The early weakness took place as markets in Europe retreated in reaction to disappointing survey data. Specifically, Eurozone ZEW Economic Sentiment plunged to 23.7 from 48.1 (expected 41.3), while Germany's ZEW Economic Sentiment dropped to 8.6 from 27.1 (consensus 18.2).

The news from overseas contributed to the shaky start and so did the underperformance of some closely-watched groups. Most notably, the top-weighted sectortechnology (-0.2%)spent the majority of the trading day in the red amid broad weakness. Chipmakers lagged early, but the PHLX Semiconductor Index was able to narrow its loss to 0.1% by the close. Meanwhile, most large cap tech components underperformed, while Apple (AAPL 95.97, -0.02), IBM (IBM 187.34, -0.13), and Microsoft (MSFT 43.52, +0.32) bucked the trend.

Similar to technology, the energy sector (-0.7%) also kept the market from staging a sustained rebound. The growth-sensitive sector finished near its session low, while crude oil fell 0.7% to $97.35/bbl.

Elsewhere, another influential sectorhealth carewas able to end just ahead of the broader market even as biotechnology weighed. The iShares Nasdaq Biotechnology ETF (IBB 251.66, -1.55) lost 0.6% and surrendered yesterday's gain.

Like health care, other countercyclical sectors finished near their flat lines. Consumer staples (-0.1%) and utilities (-0.1%) logged modest losses, while the weakest sector of the monthtelecom servicesadded 0.5% to narrow its August decline to 2.5%.

Even though equities endured a sloppy session, participants did not rush in search of volatility protection. In fact, the CBOE Volatility Index (VIX 14.14, -0.09) finished in the red. The modest losses did not translate into higher demand for Treasuries either as the 10-yr note settled on its low with the benchmark yield up two basis points at 2.45%.

Participation was below average with 531 million shares changing hands at the NYSE floor.

Economic data was limited to the Job Opening and Labor Turnover Survey for June and the Treasury Budget for July:
The Job Openings and Labor Turnover Survey for June indicated job opening increased to 4.671 million from 4.577 million
The Treasury Budget for July showed a deficit of $94.60 billion, which followed the prior deficit of $97.60 billion, while the consensus expected the deficit to hit $96.00 billion
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET, while the Retail Sales report for July ( consensus 0.3%) will cross the wires at 8:30 ET. Separately, the Business Inventories report for June (consensus 0.4%) will be released at 10:00 ET.
Nasdaq Composite +5.1% YTD
S&P 500 +4.6% YTD
Dow Jones Industrial Average -0.1% YTD
Russell 2000 -2.6% YTD

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