Day Traders Diary
12/7/12
Equities started the day in the black following the release of November nonfarm payrolls, which revealed an addition of 146,000 jobs. However, the optimism was short-lived and stocks surrendered their early gains after the preliminary reading of the December Michigan Sentiment fell short of estimates. The remainder of the session was relatively quiet as the S&P 500 traded near its unchanged line, the Nasdaq hovered near its lows, while the Dow spent the day climbing back to its highs. As a result, the benchmark S&P 500 index finished higher by 0.3%.
This morning, House Speaker Boehner and Minority Leader Pelosi both spoke before the media in Washington, but their message remained the same. During his remarks, Speaker Boehner said that no progress has been made in negotiations and the White House "has wasted another week." Meanwhile, Representative Pelosi reiterated that Democrats stand ready to extend Bush-era tax cuts for all but top 2% of earners.
Financials have outperformed after Wednesday's announcement from Citigroup (C 37.64, +0.62) indicated the company will dismiss more than 11,000 employees. Citigroup advanced 1.7% today and most majors saw comparable gains. However, Goldman Sachs (GS 116.57, -0.63) and Wells Fargo (WFC 33.23, +0.09) missed out on the sector-wide rally. Earlier, the Commodity Futures Trading Commission ordered Goldman Sachs to pay a $1.5 million civil monetary penalty to settle charges stemming from failure to diligently supervise its employees in late 2007.
Although domestic financials advanced, their European counterparts were relatively weaker. Spain's Banco Santander (SAN 7.59, -0.05) and Germany's Deutsche Bank (DB 44.82, -0.67) settled lower by 0.7% and 1.5%, respectively.
The tech sector was the biggest laggard and Apple (AAPL 533.25, -13.99) continued its weakness. The largest tech component lost 2.6% during today's session, and is down near 10.0% since Monday.
Elsewhere in technology, networking stocks were generally lower and Cisco Systems (CSCO 19.33, -0.14) shed 0.7%. Earlier, the company held its Analyst Day where Chief Executive Officer said Cisco has "gone too long" without making an acquisition.
Major hard drive manufacturers have enjoyed a strong week. Since Monday, Seagate (STX 28.34, -0.19) has added over 12.0% while Western Digital (WDC 37.60, +0.50) has rallied more than 11.0%. Today, the two headed in opposite directions. Seagate slipped 0.7% while Western Digital gained 1.4%.
In notable analyst action, 3D Systems (DDD 45.61, +1.07) advanced 2.4% after BB&T Capital Markets initiated coverage with a 'Buy' rating and a $60 price target.
The GEO Group (GEO 32.00, +2.56) was the second-best S&P 500 component. The correctional facility operator surged 8.7% after the company authorized a special dividend of $350 million, and announced it has taken critical steps towards its planned conversion to a Real Estate Investment Trust. As a REIT, the company is expected to generate between $215 and $225 million in 2013 funds from operations. Peer Corrections Corporation of America (CXW 35.48, +1.37) gained 4.0%.
Last evening, Smith & Wesson (SWHC 9.92, -0.93) reported earnings in-line with the November preannouncement. The company's strong quarter was punctuated by upside third quarter and full-year earnings and revenue guidance. In addition, the Board of Directors has approved a $20 billion share repurchase program which is scheduled to run through June 30, 2013. The stock was up as much as 3.0% in pre-market trade, but settled lower by 8.6% Meanwhile, peer Sturm, Ruger (RGR 51.44, -2.00) lost 3.7%.
Nonfarm payrolls came in at 146K versus the 90K expected by the Briefing.com consensus. The prior reading was revised down to 138K from 171K. Nonfarm private payrolls added 147K against the 120K consensus. The unemployment rate was reported at 7.7%, ahead of the Briefing.com consensus which called for the figure to come in at 8.0%.
Hourly earnings rose by 0.2% while the expectations called for an uptick of 0.1%. Lastly, average workweek was reported at 34.4, which was in-line with the Briefing.com consensus.
The preliminary University of Michigan Survey for December came in at 74.5, which is lower than the 82.7 that was posted in the prior month, and worse than the reading of 82.4 that had been expected by the Briefing.com consensus.
According to the Federal Reserve, consumer credit increased by $14.2 billion in October. This follows prior month's reading of a $11.4 billion increase, and is higher than the $9.9 billion that had been broadly expected among economists polled by Briefing.com.
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