Day Traders Diary


The S&P 500 settled lower by 0.6% after today's session saw an extension of yesterday's selling. Equities began the day in the red and continued sliding into the afternoon when bargain hunters stepped in and lifted the major averages off their lows. The S&P 500 managed to hold the psychologically important 1500 level, avoiding its first close below that mark since February 4.

Meanwhile, the Dow shed 0.3%, and registered slimmer losses than the other two averages. The outperformance was largely due to the strength of Wal-Mart (WMT 70.26, +1.05), which gained 1.5% after beating on earnings. However, the company issued first quarter guidance which was on the low end of analyst expectations. In addition, Wal-Mart expects its comparable store sales to be flat during the first quarter. This suggests the worries regarding consumer spending, expressed in an internal email last week, have some credence to them.

Wal-Mart also contributed to the strength of consumer staples which finished with a gain of 0.3%. The defensively-oriented sector also received support from Hormel Foods (HRL 36.51, +0.39) and Safeway (SWY 22.97, +2.84), both of which climbed on earnings. Hormel reported quarterly results in-line with the Capital IQ consensus while Safeway eclipsed its earnings expectations by $0.19.

As staple stocks held strong for the bulk of the session, telecoms joined in during afternoon trade and settled higher as well. Verizon Communications (VZ 45.12, +0.20) advanced 0.5% after displaying relative strength in the face of broad selling pressure.

With defensive sectors ending in the black, cyclical stocks were among the biggest laggards. Materials led to the downside for a large portion of the day, and finished as the day's weakest sector. Chemical producers underperformed after Dow Chemical (DOW 30.84, -0.80) was ordered to pay $400 million in a case involving price fixing.

The materials sector was yesterday's biggest laggard as well. Today's intraday weakness caused it to surrender all of its year-to-date gains, but late-afternoon buying helped the space climb back into the black for 2013. However, its 2013 advance has been trimmed to just 0.1%.

Elsewhere, the tech space followed closely behind materials. This occurred despite the slight outperformance from its largest component, Apple (AAPL 446.06, -2.79).

Tech shares saw some notable pressure from chipmakers as Rubicon Technology (RBCN 4.92, -0.85) plunged 14.7% on disappointing earnings and cautious guidance. Meanwhile, the broader PHLX Semiconductor Index fell 1.8%.

As a result of today's selling, the CBOE Volatility Index (VIX 15.42, +0.74) jumped for the second day in a row. The near-term volatility measure has now risen to its highest close of the year.

Reviewing S&P 500 sector performance, materials (-0.9%), technology (-0.9%), financials (-0.9%), and industrials (-0.9%) led to the downside while consumer staples (+0.3%) and telecoms (+0.2%) outperformed.

Volume was above average once again as 814 million shares changed hands on the floor of the New York Stock Exchange.

Today's economic data was plentiful with most reports falling largely in-line with expectations. Weekly initial claims rose to 362,000 which placed the figure right back in the 350,000-400,000 range seen for much of last year. Meanwhile, consumer prices saw no change in January while core CPI ticked higher by 0.3%, slightly ahead of expectations.

January existing home sales were reported at an annualized rate of 4.92 million which was just a shade below the 4.94 million expected by the consensus.

Leading indicators for January increased by 0.2%, slightly worse than the consensus which had expected an uptick of 0.3%. Today's figure followed the prior month's rise of 0.5%.

Lastly, the February Philadelphia Fed Survey fell to -12.5 to follow January's reading of -5.8. Economists polled by had expected that the Survey would improve to 1.5.

There is no economic data scheduled to be released tomorrow.

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