Day Traders Diary


The stock market began the trading week on a higher note, but not before showing some late morning volatility. The S&P 500 climbed 0.5% after briefly dipping below the 2,000 mark while the Nasdaq Composite (+0.4%) underperformed slightly.


Equity indices slumped out of the gate with cyclical sectors fueling the early weakness. That selling was congruent with a retreat in the oil market, but a reversal in crude futures helped halt the slide in equities. The stock market spent the afternoon near its flat line, rallying to a fresh high during the final 15 minutes of the session.


Crude oil was in focus throughout the day as the energy component probed the $34.60/bbl area in overnight action before rallying to end the day higher by 2.0% at $36.34/bbl. The late morning reversal underpinned the energy sector (+0.8%), which rebounded from last week's 6.6% dive.


The energy sector climbed into the green with relative ease, but the same could not be said for most of the remaining cyclical groups. The technology sector (+0.6%) was an exception as the top-weighted group climbed ahead of the broader market during the afternoon after showing relative weakness at the start. That early weakness could be traced back to the shares of Apple (AAPL 112.48, -0.70) as the tech giant struggled after Morgan Stanley lowered its iPhone sales forecast. Apple settled lower by 0.6% after being down more than 2.0% in the early going.


The uptick in the tech sector masked relative weakness among high-beta chipmakers. Accordingly, the PHLX Semiconductor Index settled lower by 0.7% with most of its components ending in the red.


Staying on the high-beta theme, transport stocks also struggled while biotechnology benefited from the late afternoon strength. The Dow Jones Transportation Average surrendered 0.5%, widening its December loss to 7.6%, while the iShares Nasdaq Biotechnology ETF (IBB 320.84, +0.95) gained 0.3%.


On the corporate front, Jarden (JAH 54.09, +1.41) spiked 2.7% after agreeing to be acquired by Newell Rubbermaid (NWL 42.15, -3.13) for $60/share in cash and stock.


The oil-driven rebound off late morning lows masked continued weakness in the corporate bond space. High-yield remained weak with iShares iBoxx $ High Yield Corporate ETF (HYG 78.83, -0.69) falling 0.9%, while investment grade debt also faced some pressure, evidenced by a 0.7% decline in iShares Investment Grade Corp Bond ETF (LQD 114.35, -0.85).


Treasuries retreated throughout the day, ending on their lows with the 10-yr yield rising ten basis points to 2.23%.


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


Tomorrow, November CPI ( consensus 0.0%) and December Empire Manufacturing Index (expected -5.9) will be reported at 8:30 ET while December NAHB Housing Market Index (consensus 63) will cross the wires at 10:00 ET.


Nasdaq Composite +4.6% YTD

S&P 500 -1.8% YTD

Dow Jones Industrial Average -2.6% YTD

Russell 2000 -7.4% YTD

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