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Leigh Baldwin & Co.

112 Albany Street, Cazenovia, NY 13035 | Phone: (315) 655-2964 Toll Free: 1-800-659-8044

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Day Traders Diary

10/22/14

The stock market ended the midweek session on a lower note, causing the S&P 500 (-0.7%) to snap its four-day winning streak. The benchmark index slumped into the red during afternoon action while the Dow Jones Industrial Average (-0.9%) underperformed once again.

Equity indices displayed modest gains in the early going, but that advance took place despite the lack of concerted leadership. The underperformance of several influential sectors weighed on the market and led to a mid-session retreat.

Five of six cyclical sectors ended behind the broader market with energy (-1.7%) showing the largest decline. The growth-sensitive sector displayed intraday strength, but slumped in the afternoon amid weakness in crude oil. The energy component spent the morning near its flat line, but plunged in the afternoon to end lower by 2.4% at $80.49/bbl. Greenback strength acted as a bit of a headwind with the Dollar Index (85.75, +0.45) rising 0.5%.

Ending just ahead of energy was the industrial sector (-1.3%), which was pressured by Boeing (BA 121.45, -5.67). The Dow component reported better than expected results, but fell 4.5% amid concerns about increasing production costs for its Dreamliner jet.

Transport stocks also weighed on the sector with the Dow Jones Transportation Average falling 2.1%. The bellwether complex narrowed this week's gain to 2.0% after Ryder (R 81.17, -5.89) and Norfolk Southern (NSC 106.50, -3.35) reported earnings. Ryder missed top-line estimates while Norfolk Southern reported disappointing earnings and revenue.

Elsewhere, the technology sector (-0.6%) was the lone outperformer among cyclical groups. Broadcom (BRCM 39.37, +2.04) surged 5.5% in reaction to better than expected results while most large cap components ended in the red. Apple (AAPL 102.99, +0.52) and Google (GOOGL 542.69, +4.66) bucked the trend, climbing 0.5% and 0.9%, respectively. Chipmakers finished among the laggards with the PHLX Semiconductor Index falling 1.4%.

The underperformance of microchip names pressured the Nasdaq (-0.8%), which also faced weakness in the biotech space. Biogen Idec (BIIB 309.07, -17.70) sank 5.4% after investors overlooked better than expected earnings, instead focusing on slowing sales of the company's main drug. The iShares Nasdaq Biotechnology ETF (IBB 276.24, -2.03) lost 0.7% while the health care sector shed 0.6%.

On the upside, countercyclical consumer staples (+0.1%) and utilities (+0.6%) displayed relative strength throughout the session. The utilities sector extended its October gain to 4.6%.

Treasuries ended flat after reclaiming their intraday losses. The 10-yr yield finished at 2.22%.

Participation was above average with more than 779 million shares changing hands at the NYSE floor.

Economic data was limited to the MBA Mortgage Index and CPI:

The weekly MBA Mortgage Index spiked 11.6% to follow last week's increase of 5.6%
CPI and core CPI both ticked up 0.1% (CPI Briefing.com consensus 0.0%; Core CPI consensus +0.2%)
Energy prices declined 0.7%, representing the third monthly decrease
Food prices, meanwhile, increased 0.3% after rising 0.2% in August with beef and veal prices rising 2.0% to bring their 2014 increase to 16.7%
Tomorrow, weekly Initial Claims will be released at 8:30 ET (Briefing.com consensus 285K) while the FHFA Housing Price Index for August will cross the wires at 9:00 ET. The day's data will be topped off with the Leading Indicators report for September (consensus 0.5%), which will be released at 10:00 ET.

Nasdaq Composite +4.9% YTD
S&P 500 +4.3% YTD
Dow Jones Industrial Average -0.7% YTD
Russell 2000 -5.7% YTD All comments contained herein are for informational purposes only, and should not be considered as a solicitation to buy or sell any security. The firm does not guarantee the accuracy or completeness of the information or make any warranties regarding results from it's usage.