Day Traders Diary
The major averages ended the Tuesday session near their flat lines with the S&P 500 registering a slight gain (+0.04%) to snap its three-day skid while the Nasdaq Composite (-0.2%) settled in the red.
Equity indices slumped at the start with investor sentiment pressured by the continued lack of progress between Greece and its creditors. The ongoing uncertainty weighed on European markets, but they were able to climb off their lows into the close. Meanwhile, U.S. stocks hit their lows not long before Europe closed for the day before returning to their flat lines.
The ensuing rebound helped stocks turn positive during afternoon action, but the S&P 500 could not overtake its 100-day moving average (2,085), settling below that mark for the second consecutive day. Interestingly, this was the first time that the benchmark index registered back-to-back settlements below the 100-day average since late October.
Seven sectors registered losses, but only telecom services (-0.5%) surrendered more than 0.2%. Meanwhile, the top-weighted technology sector (-0.2%) struggled throughout the day and contributed to the underperformance of the Nasdaq. The tech sector suffered from losses among influential components like Apple (AAPL 127.42, -0.38), Google (GOOGL 542.16, -1.32), and Qualcomm (QCOM 66.84, -0.44) while high-beta chipmakers traded in mixed fashion, which was masked by a 0.1% decline in the PHLX Semiconductor Index. Micron (MU 25.19, -0.73) was a notable laggard, falling 2.8%, after Drexel Hamilton downgraded the stock to 'Sell' from 'Hold.'
Elsewhere among cyclical sectors, the consumer discretionary space (-0.1%) underperformed throughout the day with most homebuilders registering losses after Hovnanian (HOV 2.86, -0.31) reported disappointing results with its Chief Executive Officer saying the company had overestimated buyer demand. Shares of HOV fell 9.8% while iShares Dow Jones US Home Construction ETF (ITB 26.27, -0.11) surrendered 0.3%.
Staying on the earnings front, another discretionary component—Lululemon (LULU 68.27, +6.75)—spiked 11.0% after its one-cent beat overshadowed below-consensus guidance.
On the upside, consumer staples (+0.5%) and financials (+0.2%) ended in the lead after overtaking the energy sector (unch), which retreated from its opening high even as crude oil spiked 3.4% to $60.12/bbl. Greenback strength was not a factor as the Dollar Index ended flat.
Treasuries retreated throughout the day with the 10-yr note ending near its low to send its yield higher by two basis points to 2.41%.
Once again, today's participation was below average with roughly 700 million shares changing hands at the NYSE floor.
Economic data included Wholesale Inventories and JOLTS:
Wholesale inventories increased 0.4% in April following an upwardly revised 0.2% gain (from 0.1%) in March while the Briefing.com consensus expected an increase of 0.2%
Durable goods inventories increased 0.1% in April, down from a 0.5% increase in March
Gains in automotive (1.8%) and machinery inventories (0.7%) offset declines in professional equipment (-2.1%) and metals (-1.2%) inventories
Nondurable goods inventories increased 0.8% in April after declining 0.3% in March with much of the increase resulting from higher petroleum and gasoline prices, which helped boost petroleum inventories by 2.3% in April
The April Job Openings and Labor Turnover Survey showed that job openings increased to 5.376 million from a revised rate of 5.109 million (from 4.994 million)
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while the Treasury Budget for May (Briefing.com consensus -$85.00 billion) will cross the wires at 14:00 ET.
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