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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

7/7/15

The stock market was on track for a sharp decline in the early going, but the opening weakness became a distant memory by the end of the trading day. The S&P 500 gained 0.6% after being down 1.2% at the start while the Nasdaq Composite (+0.1%) underperformed throughout the day.

Equity indices struggled at the start amid rising macroeconomic uncertainty overseas. Greece was in the headlines this morning, but today's Eurogroup meeting ended rather quickly with Chief Jeroen Dijsselbloem saying the Eurogroup expects Greece to submit a formal request for access to the European Stability Mechanism tomorrow. To that point, the Financial Times reported during the afternoon that Greece has indeed sent an ESM access request to the European Central Bank.

As for China, the Shanghai Composite lost 1.3% in the Tuesday session despite Monday's CNY1.80 trillion liquidity injection from the People's Bank of China and other emergency measures undertaken by the government. As a result nearly 25% of A-share listings have been halted over the past seven days as companies scramble to protect their market values.

Investors appeared to be concerned with the overseas uncertainty at the start of the session, but the heavy selling abated just as markets across Europe closed for the day. The S&P 500 then returned above its 200-day moving average (2,055) and continued its charge into positive territory. It is worth noting that afternoon action featured a report suggesting a short-term debt deal could be offered to Greece, but the report was attributed to an unnamed official, which should be met with caution.

Cyclical sectors displayed relative weakness at the start, but just about every growth-sensitive group erased its decline by the close. Top-weighted financials (+0.2%) and technology (+0.2%) spent the bulk of the session at the bottom of the leaderboard, but dip-buyers helped the two sectors erase their losses. That being said, high-beta chipmakers finished among the laggards with the PHLX Semiconductor Index shedding 0.3% after Advanced Micro Devices (AMD 2.09, -0.38) lowered its Q2 revenue guidance due to weaker than expected PC demand. For its part, AMD surrendered 15.4%.

Elsewhere among cyclical groups, the materials sector (-0.3%) spent the day behind other sectors while another commodity-related group—energy (+0.9%)—settled among the leaders. The energy sector outperformed while crude oil struggled to stay near its flat line after yesterday's 7.8% dive. WTI crude settled lower by 0.4% at $52.33/bbl, but climbed into the green in electronic trading.

Also of note, industrials (+0.8%) played a significant role in the turnaround with transport stocks leading the way. The Dow Jones Transportation Average jumped 1.1% with all but three names ending in the green. Kansas City Southern (KSU 94.40, +2.75) spiked 3.0% after being upgraded to 'Buy' at UBS while Con-way (CNW 36.87, -0.16) was the weakest DJTA component, falling 0.4%.

Over on the countercyclical side, health care (+0.4%) and telecom services (+0.5%) ended with modest gains while consumer staples (+2.0%) and utilities (+2.5%) outperformed throughout the session.

Interestingly, the rate-sensitive utilities sector climbed into the afternoon even as selling in the Treasury market pressured the 10-yr note from its morning high. Still, the benchmark note ended in the green with its yield down three basis points at 2.26%.

Today's trading volume was heavier than usual with more than 950 million shares changing hands at the NYSE floor.

Economic data released this morning included Trade Balance and JOLTS:
  • The U.S. trade deficit increased by $1.20 billion in May from April's downwardly revised $40.70 billion (from $40.90 billion) to $41.90 billion while the Briefing.com consensus expected an increase to $42.50 billion 
    • The goods deficit increased $1.20 billion in May from April's $60.30 billion to $61.50 billion while the services surplus was virtually unchanged at $19.60 billion 
  • The May Job Openings and Labor Turnover Survey showed that job openings increased to 5.376 million from a revised rate of 5.109 million (from 5.367 million) 
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET, the FOMC Minutes from the June meeting will be reported at 14:00 ET, and the Consumer Credit report for May (Briefing.com consensus $18.20 billion) will cross at 15:00 ET.
  • Nasdaq Composite +5.5% YTD 
  • Russell 2000 +3.6% YTD 
  • S&P 500 +1.1% YTD 
  • Dow Jones Industrial Average -0.3% 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.