Day Traders Diary


The stock market snapped its three-day skid with small caps pacing the Tuesday rebound. The Russell 2000 jumped 1.2% while the S&P 500 added 0.2% with eight sectors ending in the green. However, the advance masked an afternoon slide from intraday highs that caused the Dow to end flat.

Equity indices began the day with slim gains after investors received a trio of quarterly reports from the financial sector (+0.5%). Citigroup (C 51.47, +1.57) was a notable standout, surging 3.2%, in reaction to its better than expected results combined with news indicating the company will exit its consumer business in 11 markets around the world. However, the broader sector could not pull away from the S&P 500 as JPMorgan Chase (JPM 57.99, -0.17) and Wells Fargo (WFC 48.83, -1.37) weighed. Shares of JPM lost 0.3% following a bottom-line miss while Wells Fargo fell 2.7% after reporting in-line results.

Although the financial sector contributed to an opening boost, the market did not build on its early gain until the Russell 2000 climbed above its opening high. That strength emboldened bargain hunters who rushed into recently-battered areas like transports and chipmakers.

However, the intraday strength began fading shortly after noon ET with selling activity accelerating as crude oil plunged into the pit close. The energy component dove nearly 5.0% to $81.81/bbl, dragging the energy sector (-1.2%) down with it. The sharp drop sent oil to levels last seen in mid-2012, while the energy sector extended its October loss to 10.9%.

The afternoon retreat from highs was also fueled in part by weakness in the health care sector (-0.8%). The group tried to stage an intraday bounce, but was held back by Johnson & Johnson (JNJ 97.01, -2.11), which fell 2.1% despite beating earnings estimates and hiking its guidance.

Even though the S&P 500 gave back its entire advance, the areas that displayed strength in the morning maintained their gains. Transport stocks underpinned the industrial sector (+1.3%) with the Dow Jones Transportation Average climbing 2.6%. JetBlue Airways (JBLU 10.23, +0.82) soared 8.7% to lead the way while shipper Kirby (KEX 99.63, -0.20) was the lone decliner.

Elsewhere, the relative strength among chipmakers sent the PHLX Semiconductor Index higher by 1.9%. Skyworks (SWKS 48.91, +3.59) was the standard-bearer, rallying 7.9% after boosting its guidance while Intel (INTC 32.14, +0.67) rose 2.1% ahead of its quarterly report. For its part, the top-weighted technology sector (+0.3%) ended a bit ahead of the broader market.

Also of note, the Dollar Index (85.81, +0.28) spent the day in positive territory while Treasuries finished just below their overnight highs. The 10-yr note added 24 ticks to send its yield lower by nine basis points to 2.20%.

Participation remained on the strong side with more than 940 million shares changing hands at the NYSE floor.

Tomorrow, the weekly MBA Mortgage Index will be reported at 7:00 ET, while the Retail Sales report for September ( consensus -0.2%), September PPI (consensus 0.1%), and October Empire Manufacturing (expected 20.4) will all be released at 8:30 ET. Also of note, the Business Inventories report for August (consensus 0.4%) and the Fed's Beige Book for October will cross the wires at 10:00 ET and 14:00 ET, respectively.

S&P 500 +1.6% YTD
Nasdaq Composite +1.2% YTD
Dow Jones Industrial Average -1.6% YTD
Russell 2000 -8.8% YTD

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