Day Traders Diary


The major averages spent the Wednesday session in a slow retreat from their opening highs, but they were able to keep more than half of their opening gains. The S&P 500 climbed 0.7% while the Nasdaq Composite (+0.5%) underperformed.

Equities surged out of the gate amid reports from Europe indicating Greece is now ready to accept all conditions in order to secure a bailout. The report sparked a rush to risk assets, but the Greek offer was met with a cool reception from Eurozone leaders. Most notably, Germany's Chancellor Angela Merkel reiterated that talks will not resume until after Sunday's referendum, adding that "a compromise at any price" is not worthwhile. Similarly, Eurogroup Chief Jeroen Dijsselbloem said he does not see the need for a resumption of talks ahead of Sunday's referendum.

Despite charging at the start, stocks began inching away from their highs about 30 minutes into the session after Greek Prime Minister Alexis Tsipras reiterated his call for a 'no' vote during Sunday's referendum. A small pullback ensued as Mr. Tsipras' comments cast doubt on earlier speculation that the referendum could be cancelled altogether.

Nine sectors were able to end the day with gains while energy (-1.3%) struggled amid daylong weakness in crude oil that sent the energy component to levels not seen since late May. WTI crude settled lower by 4.2% at $56.94/bbl with greenback strength contributing to the move as the Dollar Index (96.25, +0.76) rose 0.8%.

Today's plunge in crude oil failed to boost airlines as the industry group was hit with broad-based selling interest after the Department of Justice confirmed a probe into potential collusion in the industry. Delta Air Lines (DAL 40.27, -0.81) and JetBlue (JBLU 20.04, -0.71) lost 2.0% and 3.4%, respectively, while the Dow Jones Transportation Average eked out a slim gain of 0.2% thanks to gains among shipping and railroad names.

Elsewhere among cyclical sectors, consumer discretionary (+1.0%) and financials (+1.3%) outperformed throughout the session. The financial sector held the lead into the close with Chubb (CB 119.99, +24.85) soaring 26.1% after agreeing to be acquired by ACE Limited (ACE 102.49, +0.81) for roughly $124.13/share in cash and stock. The acquisition boosted other insurers with Dow component Travelers (TRV 99.30, +2.64) jumping 2.7%.

Also of note, the technology sector (+0.6%) was among the early leaders, but the top-weighted group slipped behind the broader market during afternoon action. The retreat from early highs was paced by chipmakers with the PHLX Semiconductor Index narrowing its gain to 0.2% after being up 1.5% at the start.

Treasuries ended the day not far above their lows with the 10-yr yield climbing six basis points to 2.42%.

Today's participation was ahead of average as more than 840 million shares changed hands at the NYSE floor.

Economic data included ADP Employment, ISM Index, Construction Spending, and MBA Mortgage Index:
  • The ADP National Employment Report revealed that employment in the nonfarm private business sector rose by 237K in June, which was above the increase of 200K expected by the consensus 
    • The May reading was revised up to 203,000 from 201,000 
  • The ISM Manufacturing Index increased to 53.5 in June from 52.8 in May while the consensus expected an increase to 53.2 
    • A small acceleration in new orders growth (56.0 from 55.8) was not enough to keep the Production Activities index from falling to 54.0 in June from 54.5 in May 
  • Construction spending increased 0.8% in May after a downwardly revised 2.1% (from 2.2%) increase in April while the consensus expected an increase of 0.3% 
    • Typically, construction spending naturally pulls back after an outsized 2.0% monthly gain. Not only did construction spending remain on a positive track, but it easily topped what we considered to be inflated expectations. 
  • The weekly MBA Mortgage Index fell 4.7% to follow last week's 1.6% increase 
Tomorrow, weekly Initial Claims ( consensus 273K) and June Nonfarm Payrolls (consensus 230K) will both be reported at 8:30 ET while the Factory Orders report for May (consensus -0.5%) will cross the wires at 10:00 ET.
  • Nasdaq Composite +5.9% YTD 
  • Russell 2000 +4.4% YTD 
  • S&P 500 +0.9% YTD 
  • Dow Jones Industrial Average -0.4% YTD


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