Day Traders Diary


The stock market registered a slim loss on Tuesday, making for a near carbon copy of yesterday's affair with the S&P 500 shedding 0.1%.


Equities faced some selling pressure at the start after the overnight session was filled with more speculation about Greece's future in the eurozone. Last night, leaders from France, Germany, and EU met to draft a proposal for Greek representatives, but Greek leaders prepared a version of their own. That being said, it remains unclear if either version will be deemed acceptable by both sides.


With Greece in limbo for at least another day, a short squeeze in the euro sent the single currency higher by 2.0% against the dollar to 1.1145. Contributing to the euro strength was some chatter that the European Central Bank could stop its quantitative easing program early due to inflationary pressures. To that point, eurozone CPI rose 0.3% year-over-year in May (expected 0.2%) while core CPI increased 0.9% (consensus 0.7%). Germany's 10-yr bund tumbled in response, sending its yield higher by 17 basis points to 0.72%.


Similarly, the U.S. 10-yr note retreated overnight and continued backtracking into the afternoon. The benchmark note settled just above its worst level of the day with its yield higher by eight basis points at 2.26%.


As for stocks, the S&P 500 found early support in the neighborhood of its 50-day moving average (2,100) and returned to its flat line shortly after noon ET. In all likelihood, some of the money leaving Treasuries found its way into stocks, but the benchmark index could not stay above its unchanged level into the close.


Five sectors registered gains with all coming from the cyclical side; however, the top-weighted technology sector (-0.3%) could not keep pace with the market. High-beta chipmakers were largely responsible for the weakness, evidenced by a 1.2% decline in the PHLX Semiconductor Index. Despite today's retreat, the index remains higher by 6.0% so far in Q2. Meanwhile, large cap tech names were mixed with Apple (AAPL 129.96, -0.58) and Microsoft (MSFT 46.92, -0.31) losing close to 0.5% apiece while Google (GOOGL 553.95, +4.74) and Facebook (FB 80.44, +0.15) advanced.


Similar to technology, the health care sector (-0.6%) acted as a lead blanket, limiting the rebound's strength. Large cap components fueled the weakness while biotechnology also struggled with iShares Nasdaq Biotechnology ETF (IBB 363.46, -1.35) sliding 0.4%.


On the upside, energy (+0.5%) and materials (+0.3%) outperformed throughout the day while consumer discretionary (+0.2%), financials (+0.2%), and industrials (+0.2%) also registered gains.


The energy sector was supported by a rally in crude oil, which climbed 1.7% to $61.28/bbl. Conversely, the energy component benefitted from a 1.5% decline in the Dollar Index (95.96, -1.43).


Today's participation was an improvement from yesterday, but that was a small victory considering only 712 million shares changed hands at the NYSE floor.


Economic data was limited to the Factory Orders report for April, which showed a 0.4% decline while the consensus expected a flat reading. April marked the eighth monthly decline in factory orders over the last nine months. Furthermore, durable goods orders were revised down from the -0.5% reported in the advance release to -1.0%.


Excluding transportation, durable goods orders declined 0.2% in April, which was down from a 0.5% gain that was originally reported in the advance data, and more in-line with the weak readings from the April regional manufacturing surveys.


Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while the May ADP Employment Change will be reported at 8:15 ET ( consensus 200K). The April Trade Balance (consensus -$44.00 billion) and May ISM Services (consensus 57.1) will be released at 8:30 ET and 10:00 ET, respectively, while the Fed's June Beige Book will cross the wires at 14:00 ET.


Nasdaq Composite +7.2% YTD

Russell 2000 +3.9% YTD

S&P 500 +2.5% YTD

Dow Jones Industrial Average +1.1% YTD

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