Day Traders Diary


The stock market finished a defensive week on a cautious note. The S&P 500 lost 1.2% while the Nasdaq Composite (-2.3%) lagged throughout the session. The two indices ended the week with respective losses of 3.1% and 4.5%.

The key indices were pressured from the start amid big losses in the semiconductor space after Microchip Technology (MCHP 39.96, -5.59) issued a revenue warning, which was coupled with the company's nettlesome view that an industry correction is at hand. Part of Microchip's view was formed from the understanding that its business in China, which is traditionally the strongest in the third quarter and accounted for 29% of net sales in fiscal 2014, saw a sequential decline in sales this time around. Shares of MCHP sank 12.3%.

The comments led to broad weakness among chipmakers with the PHLX Semiconductor Index plunging 6.9%. The index dove below its 200-day moving average (594.27) and was down as much as 7.7% before finishing the day near April lows. The top-weighted index componentIntel (INTC 31.91, -1.71)lost 5.1% while Cree (CREE 30.77, -0.09) withstood the bulk of the selling. That being said, the stock entered today's session with an October loss 24.6%.

Meanwhile, the remainder of the tech sector showed few signs of strength. Apple (AAPL 100.73, -0.29) shed 0.3%, but other heavyweights like Facebook (FB 72.91, -3.00), Google (GOOGL 555.19, -15.62), and Microsoft (MSFT 44.03, -1.82) lost between 2.9% and 4.0%.

Outside of technology, the materials sector (-1.5%) also lagged throughout the day with steelmakers pacing the slide. The Market Vectors Steel ETF (SLX 40.97, -1.15) lost 2.7%. Similarly, industrials (-1.5%) were unable to catch up to the broader market amid weakness in transport stocks. The Dow Jones Transportation Average fell 2.0% to cap a rough week that saw the bellwether complex lose 6.9%.

The remaining cyclical sectors showed some intraday strength, allowing the S&P 500 to make a short-lived appearance in the green. However, the index slumped to new lows over the course of the afternoon.

Likewise, the Dow Jones Industrial Average (-0.7%) spent some time in the green, but the intraday strength among blue chips faded into the close. The index was able to finish ahead of the broader market thanks to gains in consumer names like Coca-Cola (KO 44.47, +0.60), Procter & Gamble (PG 84.69, +1.03), and Wal-Mart (WMT 78.29, +0.43). For its part, the consumer staples sector added 0.5% to match the gain in the utilities sector. Despite its outperformance, the Dow surrendered its 2014 advance.

Also of note, the Dollar Index (85.90, +0.38) rose 0.4%, posting its second consecutive advance. However, today's rally could not save the index from registering a 0.9% loss for the week.

Treasuries spent the bulk of the day near their flat lines before rallying into the close. The 10-yr yield slipped two basis points to 2.29%.

Once again, participation was above average with more than 920 million shares changing hands at the NYSE.

Investors received just one economic report this morning:

Export prices, excluding agriculture, decreased 0.2% in September after decreasing 0.2% in the prior reading
Excluding oil, import prices ticked down 0.1%, which followed last month's unchanged reading
There is no economic data of note on Monday's schedule.

S&P 500 +3.1% YTD
Nasdaq Composite +2.4% YTD
Dow Jones Industrial Average -0.2% YTD
Russell 2000 -9.3% YTD

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