Day Traders Diary
1/3/12
The S&P 500 shed 0.2% after the Federal Reserve released the minutes from its December policy meeting. The markets keyed in on comments from several members who voiced concerns over the duration of the asset purchase program. In addition, some participants "thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013." Traditional safe-haven assets saw some selling in reaction the report. Gold dropped nearly 1.5% to its session low in the 1660.00 area. Meanwhile, Treasuries saw some selling, and the 10-yr yield jumped six basis points to 1.899%, its highest close since May.Financials were some of the top performers during yesterday's rally. However, the market focus is now turning to the next step in the debate as the country nears the debt ceiling. The special measures currently being undertaken by the Department of Treasury are expected to delay the breach of the ceiling for about two months. Also of note, recent reports have indicated Treasury Secretary Tim Geithner will leave his post by the end of January. In addition, the approval of a tax plan was met with less-than-positive feedback from rating agencies which said more action on the deficit will be needed soon. Among individual financials, Goldman Sachs (GS 130.94, -0.72) and Wells Fargo (WFC 34.76, -0.29) both shed over 0.5%.
Shares of automakers responded to December car sales data. Among the notable movers, Ford Motor (F 13.46, +0.26) rose by 2.0% after the company reported a 5.0% increase in December car sales. Meanwhile, the company's utility vehicles saw 7.0% sales growth. In total, Ford sold nearly 2.2 million vehicles in 2012.
General Motors (GM 29.82, +0.69) sales also grew by 5.0%, and the stock added 2.4% in response to the positive data.
Looking at foreign-based carmakers, Toyota Motor (TM 95.37, -0.62) shed 0.7% despite reporting a 9.0% rise in its December sales. During 2012, Toyota sold almost 2.1 million vehicles.
Consumer discretionary stocks outperformed after retailers reported their December same store sales. Overall, the results were mixed as ten retailers beat the Retail Metrics consensus, while eight fell short of expectations. Among the companies which reported notable beats, Ross Stores (ROST 58.78, +4.34) and Zumiez (ZUMZ 21.22, +1.72) surged 8.0% and 8.8% respectively. Ross Stores saw strength after its sales grew 6.0%, while the general consensus expected an increase of 3.0%. However, Zumiez rallied after the company's December sales slipped by just 1.0%, while analysts expected a 3.5% decline.
Among the names which reported disappointing sales growth, Limited Brands (LTD 44.71, -2.69) slumped 5.7% after its 3.0% monthly sales growth disappointed the market, which expected an uptick of 4.7%.
The Dow Jones Transportation Average settled higher by 0.6%, and the bellwether complex outperformed the broader market. With today's gains, the index has added over 4.5% since Monday's open. In addition, transports ended the session at their best level since July 2011. Among individual components, airlines displayed relative strength as United Continental (UAL 24.93, +0.74) and Delta Air Lines (DAL 12.58, +0.35) both gained near 3.0%.
Trucking stocks underperformed. CH Robinson (CHRW 62.34, -0.82) lost 1.3% and was the biggest laggard.
The market received several economic data points this morning. According to the ADP National Employment Report, employment in the nonfarm private business sector rose by 215K in December. This was above the 140K increase expected by the Briefing.com consensus.
The latest weekly initial jobless claims count totaled 372,000, which was worse than the 365,000 that had been expected by the Briefing.com consensus. The tally was above the revised prior week count of 362,000. As for continuing claims, they rose to 3.245 million from 3.201 million.
The weekly MBA Mortgage Applications decreased by 10.4%, which follows last week's 11.2% downtick.
Elsewhere, December Challenger Job Cuts declined 22.1%, and today's reading follows the prior month's 34.4% increase.
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