Day Traders Diary

2/5/13

Today's session brought resilience to the markets as the key averages recovered the majority of their losses from Monday. The S&P 500 settled higher by 1.0% after spending the duration of the day in a steady climb. The morning sentiment was aided by upbeat European trade where Italian and Spanish markets recovered from yesterday's plunge.

Domestically, seven of ten S&P 500 sectors registered gains in the neighborhood of 1.0%. Tech shares led the way after the sector felt the brunt of Monday's selling. The largest tech stock, Apple (AAPL 457.84, +15.53), outperformed the broader market and ended higher by 3.5%.

The tech sector received some acquisition news today. Dell (DELL 13.42, +0.15) added 1.1% after entering into an agreement to be acquired by Michael Dell-Silver Lake for $13.65 per share. The deal includes a $2 billion loan from Microsoft (MSFT 27.50, +0.05).

Meanwhile, Virgin Media (VMED 45.61, +6.92) jumped 17.9% after the company confirmed its discussions with Liberty Global (LBTYA 67.88, -1.58) regarding a possible transaction.

Among notable tech earnings, ARM Holdings (ARMH 43.69, +1.74) gained 4.2% after beating on revenue. Meanwhile, the broader PHLX Semiconductor Index advanced 1.6%.

In other earnings of note, Archer-Daniel Midlands (ADM 29.38, +0.94) beat on earnings and revenue while Kellogg (K 58.50, +0.40) topped the Capital IQ revenue forecast. The two stocks supported the consumer staples sector, and ended with respective gains of 3.3% and 0.7%.

While staple stocks saw strength across the board, the discretionary sector experienced some pockets of weakness. Restaurant operator Yum! Brands (YUM 62.08, -1.86) shed 2.9% after its quarterly report included cautious guidance. This comes as the company attempts to overcome the negative publicity received after two poultry suppliers provided KFC with chicken containing unapproved antibiotic levels.

Publisher McGraw-Hill (MHP 44.92, -5.38) was another notable laggard in the discretionary space. Shares of the publishing company plunged after the Department of Justice announced plans to file a civil lawsuit against Standard & Poor's, a unit of McGraw-Hill. The Department of Justice is alleging S&P knowingly defrauded investors with its ratings on collateralized debt obligations and mortgage backed securities. McGraw-Hill is down over 20.0% since the charges were announced.

The CBOE Volatility Index (VIX 13.73, -0.94) declined over the course of the session and shed over 7.0%. The near-term volatility measure ended the session at its 20-day average.

Floor volume at the New York Stock Exchange was slightly below average as 702 million shares changed hands over the course of the day.

Today's economic data had little trading impact as the January ISM Services Index was reported at 55.2, which fell short of the 55.6 forecast by the Briefing.com consensus.

Tomorrow, the weekly MBA Mortgage Index will be reported at 7:00 ET. In notable earnings, CVS Caremark (CVS 51.72, +0.72) and Kraft Foods (KRFT 47.02, +0.62) will report their quarterly results ahead of the opening bell.

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