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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

7/28/15

The stock market snapped its five-day losing streak with a daylong Tuesday rally that sent the S&P 500 higher by 1.2%. The benchmark index tested its 100-day moving average (2,095) during afternoon action while the Nasdaq Composite (+1.0%) underperformed throughout the day.

Equity indices rebounded from losses registered over the past week, starting the day on an upbeat note after the overnight session saw more volatility in Asia. Specifically, China's Shanghai Composite was down as much as 5.1% at the start of the trading day, but narrowed its loss to 1.7% by the close. The turnaround off session lows coincided with a spike in S&P 500 futures in the wee hours of the morning.

All ten sectors posted gains with some of the recent underperformers leading the market higher. To that point, the energy sector surged 2.9% after sliding 4.3% over the past five days. The growth-sensitive sector was lifted by the shares of BP (BP 37.29, +1.24) after the industry giant reported a bottom-line miss on better than expected revenue. Another large sector member, LyondellBasell (LYB 92.46, +2.61) spiked 2.9% in reaction to a bottom-line beat. On a related note, crude oil rose 1.3% to $47.98/bbl, providing added support.

Similar to energy, the other commodity-related sector—materials (+2.1%)—finished well ahead of most other groups. Steelmakers underpinned the space after AK Steel (AKS 2.90, +0.38) soared 15.1% in reaction to a bottom-line beat, overshadowing losses in Dow component DuPont (DD 55.90, -0.83) after the company reported disappointing results.

Elsewhere among Dow members, Pfizer (PFE 35.35, +1.01) and Merck (MRK 57.52, +0.53) reported better than expected earnings, helping the health care sector (+1.8%) finish among the leaders. Furthermore, biotechnology also contributed to the strength in the sector, evidenced by a 2.5% gain in iShares Nasdaq Biotechnology ETF (IBB 382.84, +9.26).

The relative strength in biotechnology was not enough to pull the Nasdaq in-line with the broader market as several large cap technology sector (+0.9%) components underperformed. The likes of Cisco Systems (CSCO 28.21, 0.00), Google (GOOGL 659.66, +1.39), and Hewlett-Packard (HPQ 30.27, +0.02) ended little changed while Baidu.com (BIDU 168.03, -29.65) plunged 15.0% after the company reported disappointing results and issued cautious guidance.

To be sure, the slight underperformance in technology was not an issue for the broader market, which benefitted from relative strength in other areas like industrials (+1.9%). The cyclical sector rallied behind transport stocks after UPS (UPS 99.94, +4.82) and JetBlue Airways (JBLU 22.82, +0.47) reported earnings. UPS beat bottom-line estimates on light revenue while JetBlue delivered in-line results. The two stocks posted respective gains of 5.1% and 2.1% while the Dow Jones Transportation Average spiked 2.8%.

Treasuries retreated overnight and held modest losses throughout the day with the 10-yr yield climbing rising two basis points to 2.25%.

Today's participation was ahead of recent averages as more than 900 million shares changed hands at the NYSE floor.

Economic data was limited to Case-Shiller 20-City Index and Consumer Confidence:
  • The Conference Board's Consumer Confidence Index fell to 90.9 in July from a downwardly revised 99.8 (from 101.4) in June while the Briefing.com consensus pegged the Index at 100.0 
    • The reading was the lowest since September 2014 and well below the most pessimistic forecast (97.5) in the Briefing.com consensus 
    • The Present Conditions Index fell to 107.4 in July from 110.3 in June while the Expectations Index dropped to 79.9 from 92.8 
      • That was the lowest expectations reading since falling to 76.5 in February 2014 
  • The Case-Shiller 20-city Home Price Index for May rose 4.9% against a 5.6% increase expected by the Briefing.com consensus 
    • This followed the previous month's revised increase of 5.0% (from 4.9%) 
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while Pending Home Sales for June will be reported at 10:00 ET (Briefing.com consensus 1.0%). Also of note, the Federal Reserve will release its latest policy directive at 14:00 ET.
  • Nasdaq Composite +6.9% YTD
  • Russell 2000 +1.6% YTD
  • S&P 500 +1.6% YTD
  • Dow Jones Industrial Average -1.1% 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.