Day Traders Diary


The stock market continued its strong start to the week with a broad-based Tuesday rally that sent the S&P 500 higher by 0.5%. Nine of ten sectors registered gains while the benchmark index extended its week-to-date advance to 1.4%.

Equities received an opening boost from a pair of economic data points that crossed the wires this morning. An in-line CPI report suggested inflationary pressures remain contained, while a better than expected Housing Starts report underpinned homebuilders and the discretionary sector.

Fittingly, the consumer discretionary space (+0.8%) surged out of the gate and spent the entire session among the leaders. Homebuilders rallied following the upbeat data and better than expected earnings from Home Depot (HD 88.23, +4.64). The Dow component jumped 5.6%, while the iShares Dow Jones US Home Construction ETF (ITB 23.99, +0.56) advanced 2.4%.

Retail stocks also played a part in the outperformance of the discretionary sector after Dick's Sporting Goods (DKS 44.21, +0.70) and Urban Outfitters (URBN 38.59, +1.67) beat their earnings estimates. The SPDR S&P Retail ETF (XRT 87.05, +1.11) rose 1.3%.

While the influential discretionary sector displayed broad strength, other heavily-weighted groups were a bit more mixed. Technology (+0.7%) outperformed, while financials (+0.2%) and industrials (+0.2%) lagged.

The top-weighted sectortechnologyreceived support from chipmakers. The PHLX Semiconductor Index recaptured its 50-day moving average and added 0.6% with all but five components posting gains. Meanwhile, most large cap tech components were limited to modest gains, but shares of Apple (AAPL 100.53, +1.37) climbed to a fresh all-time high.

Elsewhere, the top-weighted countercyclical sectorhealth care (+0.7%)trailed the broader market for the majority of the session, but spiked during afternoon action in reaction to reports from the Wall Street Journal, indicating Salix Pharmaceuticals (SLXP 160.80, +21.63) was approached by Allergan (AGN 161.82, +6.21) about a potential acquisition. Shares of SLXP ended higher by 15.5%, while the iShares Nasdaq Biotechnology ETF (IBB 267.23, +1.02) tacked on 0.4% after showing intraday weakness.

Similar to health care, the utilities sector (+1.2%) outperformed, while the remaining two defensively-oriented groupsconsumer staples (+0.2%) and telecom services (-0.3%)lagged.

Treasuries began the day with solid gains, but spent the session in a steady retreat. The 10-yr note shed one tick with its yield ending at 2.40%.

Participation was well below average with fewer than 550 million shares changing hands at the NYSE.

Economic data was limited to CPI, and Housing Starts/Building Permits:
"Consumer prices increased 0.1% in July following a 0.3% increase in June, which matched the consensus "As expected from the July PPI report, energy prices fell 0.3% in July after increasing 1.6% in June
"Food prices accelerated, up 0.4% in July from a 0.1% increase in June "Food at home prices, typically from grocery stores, increased 0.7%, which was the largest increase since August 2011

"Excluding food and energy, core CPI increased 0.1% for a second consecutive month in July, which is what the consensus expected

"Housing starts increased 15.7% in July to 1.093 million from an upwardly revised 945,000 (from 893,000) in June, while the consensus expected an increase to 964,000 "The big news out of the housing data was an 8.3% increase (to 656,0000) in single-family construction after declines were observed in May and June

"Building permits rose to a seasonally adjusted annualized rate of 1.052 million in July versus a revised 973K for June, while the consensus expected an increase to 1.001 million
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET, while the minutes from the latest FOMC policy meeting will cross the wires at 14:00 ET.
"Nasdaq Composite +8.4% YTD
"S&P 500 +7.2% YTD
"Dow Jones Industrial Average +2.1% YTD
"Russell 2000 -0.1% YTD

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