Day Traders Diary


The major averages posted modest gains on Thursday with the S&P 500 (+0.4%) extending its week-to-date advance to 1.2%. Small caps lagged throughout the session as the Russell 2000 (+0.2%) was unable to reclaim its 200-day moving average (1145).

Despite receiving disappointing economic data from overseas (Eurozone GDP 0.0%; expected 0.1%), equity indices climbed out of the gate with yesterday's leading sectorhealth carepacing the advance. The third-largest sector added 1.2% with help from biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 261.20, +4.07) settled higher by 1.6% to extend its weekly gain to 3.8%.

The relative strength of biotechnology underpinned the Nasdaq Composite, but the tech-heavy index could not overtake the S&P 500 due to the underperformance of large cap technology names.

The tech sector (+0.1%) spent the entire session near its flat line as heavily-weighted components like Apple (AAPL 97.50, +0.26), Google (GOOGL 584.65, +0.09), IBM (IBM 187.88, -0.07), and Oracle (ORCL 40.22, -0.02) spun their wheels. Also of note, Cisco Systems (CSCO 24.54, -0.66) tumbled 2.6% with concerns about slow order growth overshadowing its better than expected earnings and revenue.

Chipmakers, however, finished a bit ahead of the sector with the PHLX Semiconductor Index adding 0.2%. Avago (AVGO 73.84, +1.87) outperformed, climbing 2.6% after agreeing to sell LSI's Axxia Networking Business assets to Intel (INTC 33.94, -0.16) for $650 million.

Elsewhere among cyclical sectors, the consumer discretionary space (+0.8%) outperformed despite losses in the quick-service restaurant space after Red Robin Gourmet Burgers (RRGB 52.63, -11.92) and Noodles & Co (NDLS 21.16, -4.06) reported disappointing results. The two sank 18.5% and 16.1%, respectively, while the discretionary sector drew strength from homebuilders and retailers. The iShares Dow Jones US Home Construction ETF (ITB 23.04, +0.38) and SPDR S&P Retail ETF (XRT 85.36, +0.84) settled higher by 1.7% and 1.0%, respectively.

Switching to the countercyclical side, the utilities sector (+1.0%) followed not far behind health care, while consumer staples (+0.4%) and telecom services (+0.4%) ended right behind the S&P 500. In the staples sector, Wal-Mart (WMT 74.39, +0.36) added 0.5% after reporting in-line results and lowering its guidance for the full year.

Treasuries rallied overnight and the 10-yr note notched its high just ahead of the open before surrendering about half of its gain during the session. The benchmark 10-yr yield fell three basis points to 2.40%.

Participation was well below average with just 506 million shares changing hands at the NYSE floor, which represented the lowest total of the year.

Economic data was limited to initial claims and import/export prices:
The initial claims increased to 311,000 from an upwardly revised 290,000 (from 289,000), while the consensus expected an increase to 305,000
Over the past several weeks, the initial claims level had averaged below 300,000, which normally signals an economy at or near full employment
If the current levels hold for several weeks, the summer drop will be written off as resulting from poor seasonal adjustments, but if the return above the 300,000 mark is a one-time event, that will be a sign of health from the labor market
Export prices, excluding agriculture, increased 0.3% in July after decreasing 0.3% in the prior reading
Excluding oil, import prices were unchanged, which followed last month's downtick of 0.1%
Tomorrow, the PPI report for July ( consensus 0.2%) and the Empire Manufacturing survey for August (consensus 15.5) will be released at 8:30 ET, while the Net Long-Term TIC Flows report will cross the wires at 9:00 ET. July Industrial Production (consensus 0.3%) and Capacity Utilization (expected 79.2%) will be announced at 9:15 ET, while the preliminary reading of the Michigan Sentiment survey for August (consensus 81.7) will be reported at 9:55 ET.
Nasdaq Composite +6.6% YTD
S&P 500 +5.8% YTD
Dow Jones Industrial Average +0.8% YTD
Russell 2000 -1.7% YTD

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