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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

6/4/15

The stock market finished the Thursday session on a lower note following a daylong retreat that sent the S&P 500 (-0.9%) below its 50-day moving average (2,100). As a result, the benchmark index will enter Friday down 0.6% for the week.

Equity indices struggled from the start as continued uncertainty surrounding Greece weighed on investor sentiment in Europe and the U.S. To that point, International Monetary Fund Managing Director, Christine Lagarde, voiced confidence that the troubled sovereign will make tomorrow's debt payment to the IMF. However, that contrasted with reports indicating Greece has requested permission to bundle all of its debt payments due this month into a single payment of about EUR1.60 billion to be paid on June 19. Meanwhile, Prime Minister Alexis Tsipras is scheduled to address the Greek parliament tomorrow evening.

In addition to commenting on Greece, Ms. Lagarde discussed the U.S., urging the Federal Reserve to delay its first rate hike until the first half of 2016. A lowered growth forecast was cited to support that argument with the IMF now expecting 2015 GDP growth of 2.5%, down from the previous forecast of 3.1%.

Treasuries marked fresh highs following the outlook change at the IMF, and built on their gains in the afternoon with the 10-yr yield falling six basis points to 2.31%. On a related note, the Dollar Index (95.49, +0.02) ended flat after erasing its overnight decline.

All ten sectors ended in the red with most growth-sensitive groups showing relative weakness. Energy (-1.2%) and materials (-1.3%) spent the bulk of the session behind other groups with energy pressured by a 2.8% drop in crude oil, which ended the pit session at $58.00/bbl ahead of tomorrow's semiannual OPEC meeting.

Elsewhere among cyclical sectors, industrials (-1.1%) and technology (-0.9%) also lost close to 1.0% apiece while the consumer discretionary sector (-0.7%) stayed ahead of the broader market thanks to mixed action among retail names. Teen apparel names rallied after Five Below (FIVE 37.77, +2.67) reported a one-cent beat and raised its guidance for the fiscal year. The stock spiked 7.6% while SPDR S&P Retail ETF (XRT 99.85, -0.09) shed 0.1%. Also of note, Dish Network (DISH 74.25, +3.44) jumped 4.9% after the Wall Street Journal reported the company has engaged in merger talks with T-Mobile US (TMUS 39.34, +1.01).

Moving to the countercyclical side, consumer staples (-0.8%), health care (-0.7%), and telecom services (-0.8%) settled near the broader market while the utilities sector (-0.2%) finished ahead of other groups thanks to today's drop in Treasury yields. The rate-sensitive sector extended this week's decline to 2.9%.

Today's participation was relatively strong when compared to recent averages as more than 710 million shares changed hands at the NYSE floor.

Economic data was limited to Initial Claims, Productivity/Unit Labor Cost Data, and Challenger Job Cuts:
  • The initial claims level declined to 276,000 for the week ending May 30 from an upwardly revised 284,000 (from 282,000) for the week ending May 23 while the Briefing.com consensus expected a drop to 280,000 
  • Nonfarm productivity in the first quarter was revised down to -3.1% from an originally reported -1.9% in the advance release while the Briefing.com consensus expected a revision to -2.9% 
    • As expected from the negative revisions in second estimate of first quarter GDP, output growth was revised down to show a decline of 1.6% in Q1 2015, down from a previously reported 0.3% decline 
    • Hourly compensation was revised up to 3.3% from 3.1%. Combined with the decline in output, this caused a 6.7% increase in unit labor costs, up from the 5.0% reported in the preliminary reading 
  • The Challenger Job Cuts report for May showed a 22.5% year-over-year decline to follow the previous 52.8% spike 
Tomorrow, the Nonfarm Payrolls report for May (Briefing.com consensus 225K) will be released at 8:30 ET while the Consumer Credit report for April (consensus $16.80 billion) will cross the wires at 15:00 ET.
  • Nasdaq Composite +6.8% YTD 
  • Russell 2000 +3.9% YTD 
  • S&P 500 +1.8% YTD 
  • Dow Jones Industrial Average +0.5% YTD
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