Day Traders Diary

11/12/12

Stocks began today's session on a higher note. However, the S&P 500 followed the early strength with a slide into the red. After hovering near its lows for little over an hour, the index staged a steady climb towards fresh session highs. The benchmark average followed the early afternoon strength with another slide towards its flat line, where it remained until the end of the day. Today's volume was well below average and the bond market was closed in observance of Veterans Day.

High-yielding telecom stocks have been under pressure during the past week. Today, the sector was the top performer. Within the space, Telephone & Data Systems (TDS 23.38, +0.81) advanced 3.6% after Citigroup upgraded the stock to 'buy' from 'neutral.'

Elsewhere in telecommunications, AT&T (T 33.87, +0.33) added 1.0% after announcing the company will subsidize the Apple (AAPL 542.83, -4.23) iPad. Meanwhile, Sprint Nextel (S 5.61, +0.06) also saw relative strength as the stock settled higher by 1.1%.

On the downside, Inteliquent (IQNT 2.96, -0.55) fell 15.7% after Morgan Stanley downgraded the stock to 'equal-weight' from 'overweight.'

Looking at today's M&A activity, Jefferies Group (JEF 16.27, +2.00) gained 14.0% after confirming plans to merge with Leucadia National (LUK 21.14, -0.66). Per the agreement, Jefferies stockholders will receive 0.81 of a share of LUK for each share of JEF owned. Following the transaction, Jefferies shareholders will hold 35.3% of Leucadia common stock.

In the materials sector, Titanium Metals (TIE 16.50, +4.93) surged 42.6% after being acquired by Precision Castparts (PCP 179.48, +8.15) for $16.50 per share. The purchase price represents a 42.6% premium to TIE's Friday closing price, and the total transaction is valued at approximately $2.9 billion.

In the health care space, biotechnology names led the group higher following positive trial data. Celgene (CELG 75.66, +4.16) surged 5.8% after its Phase III trial of Abraxane in the treatment of pancreatic cancer showed a statistically significant survival benefit.

Meanwhile, Gilead Sciences (GILD 73.92, +8.91) spiked 13.7% after reporting a 100% sustained virologic response rate for an Interferon-free regimen of Sofosbuvir and Ribavirin in treatment of Hepatitis C patients.

Homebuilders were broadly weaker and the SPDR S&P Homebuilders ETF (XHB 25.29, -0.38) shed 1.5%. Earlier, DR Horton (DHI 19.40, -1.20) reported mixed quarterly results. During the fourth quarter, the homebuilder earned $0.30 on $1.3 billion in revenue. The company's bottom line exceeded the Capital IQ consensus estimate by $0.01, while its revenue fell short of expectations. In addition, DHI reported a 61.0% increase in the value of its backlog. The account is currently valued at $1.7 billion, up from $1.0 billion during the same period last year. Shares of DR Horton slid 5.8% after trading higher at the start of the session.

Elsewhere, Beazer Homes (BZH 13.77, -2.87) slumped 17.3% after reporting a fourth quarter loss of $2.57 on $370.9 million in revenue. The company management commented on the quarter by saying, "Operationally, we generated significant growth in orders, closings and backlog, while seeing improving trends in gross margins. From a balance sheet perspective, we added liquidity, improved our book value, extended debt maturities and reduced interest expense. While our community count will likely decrease for much of the year, we are actively investing in a substantial number of new communities, which we expect to deliver closings starting in fiscal year 2014."

The Dow Jones Transportation Average outperformed the remaining industrials. The bellwether complex rose by 0.8% and 17 group components saw gains. Trucking stocks outperformed as Con-way (CNW 28.32, +0.62) and JB Hunt (JBHT 60.04, +1.38) settled higher by 2.2% and 2.4%, respectively. Railroads were also notably stronger. Kansas City Southern (KSU 77.31, +0.40) advanced 0.5% and Union Pacific (UNP 121.77, +1.52) gained 1.3%.

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.