Day Traders Diary


The stock market finished the third quarter on a cautious note with small caps leading the retreat. The S&P 500 shed 0.3% to narrow its Q3 gain to 0.6%, while the Russell 2000 (-1.5%) widened its quarterly loss to 7.7%.

Equity indices endured another volatile affair after the S&P 500 alternated between gains and losses during the past five trading days. Today's retreat represented the second consecutive decline for the benchmark index, which registered a September loss of 1.6%.

The benchmark index displayed modest strength in the early going with help from influential sectors like technology (+0.2%), financials (-0.2%), and industrials (-0.1%). The three cyclical groups helped the S&P 500 climb to a late morning high at 1985.18, but the index spent the next two hours in a steady retreat.

The slide from highs took place amid significant weakness in the two commodity-related sectors. Most notably, the energy space (-1.2%) widened its Q3 loss to 9.2% and was pressured by a 3.6% decline in crude oil. The energy component finished the pit session at $91.16/bbl, which represented a 13.6% loss for the quarter.

Similarly, the materials sector (-1.2%) stumbled in reaction to sliding prices of metals. Silver plunged 2.9% to $16.85/ozt, while gold (-0.6% to $1211.40/ozt) and copper (-1.6% to $3.01/lb) held up a bit better.

Also weighing on commodities was the continued strength of the Dollar Index, which added 0.4% to book a 3.9% gain for the month and an even more impressive 7.8% surge for the third quarter.

On the upside, the technology sector (+0.2%) finished ahead of the remaining cyclical groups and helped the S&P 500 trim its loss into the close. Large cap components displayed strength with Apple (AAPL 100.75, +0.64), Cisco Systems (CSCO 25.17, +0.24), and Visa (V 213.37, +2.44) climbing between 0.6% and 1.2%. Meanwhile, chipmakers traded alongside small-cap stocks as evidenced by a 0.9% decline in the PHLX Semiconductor Index.

Likewise, the high-beta biotechnology group underperformed, causing the health care sector (-0.6%) to finish behind the other three countercyclical sectors. The iShares Nasdaq Biotechnology ETF (IBB 273.63, -2.43) lost 0.9%.

Treasuries registered losses after spending the entire session in the red. The 10-yr note fell seven ticks to send its yield higher by three basis points to 2.50%.

Today's participation was ahead of average with more than 910 million shares changing hands at the NYSE floor.

Economic data included Chicago PMI, Consumer Confidence, and the Case-Shiller 20-City Index:

The Chicago PMI fell to 60.5 in September from 64.3 in August, while the consensus expected a decline to 61.5
Even though the PMI dropped more than expected, the current reading is far from a disappointment. Levels have remained above 60 for five of the past six months, and readings above 60 are generally considered too strong for long-term stability
The Conference Board's Consumer Confidence Index dropped to 86.0 in September from an upwardly revised 93.4 (from 92.4), while the consensus expected a fall to 92.0
This was the lowest reading in the Consumer Confidence Index since May
The Case-Shiller 20-city Home Price Index for July rose 8.1%, while a 7.4% increase had been expected by the consensus
The reading followed June's increase of 8.1%
Tomorrow, the weekly MBA Mortgage Index will be reported at 7:00 ET, while ADP Employment Change for September ( consensus 202K) will be released at 8:15 ET. The day's data will be topped off with the 10:00 ET release of the ISM Index for September (consensus 58.5) and the Construction Spending report for August (consensus 0.4%).

Nasdaq Composite +7.6% YTD
S&P 500 +6.7% YTD
Dow Jones Industrial Average +2.8% YTD
Russell 2000 -5.3% YTD

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