Day Traders Diary


The S&P 500 advanced 0.5% to begin the third quarter on an upbeat note. Although the S&P registered a solid gain, the index closed almost 12 points below its session high after being rejected by its 20- and 50-day moving averages.

Stocks climbed at the open, taking a cue from gains in major markets across the world. Global investors favored equities despite mixed PMI data out of China as the country's Manufacturing PMI declined to 50.10 from 50.80 (50.00 expected) and the HSBC Manufacturing PMI remained in contraction with a downtick to 48.2 from 48.3 (48.3 forecast).

Meanwhile, most European Manufacturing PMI reports surprised to the upside, but only Great Britain (52.5 actual, 51.5 expected) posted an expansionary reading while Spain (50.0 actual, 48.5 expected) came in right on the border between contraction and expansion. The aggregate Eurozone Manufacturing PMI ticked up to 48.8 from 48.7.

Commodities began showing strength overnight, and those gains provided a boost to growth-oriented sectors. Copper futures jumped 3.3% to $3.157 per pound while gold futures rose 2.4% to $1252.50 per troy ounce. Similarly, the Market Vectors Gold Miners ETF (GDX 24.89, +0.40) added 1.6%, giving a measure of support to the materials sector, which ended among the leaders.

The industrial sector overtook producers of basic materials into the close as transportation-related names fared well. The Dow Jones Transportation Average posted a gain of 1.1%.

Elsewhere, the energy space advanced 0.6% as crude oil climbed 1.4% to $97.95 per barrel.

While most cyclical sectors outperformed the broader market, countercyclical groups ended in mixed fashion. The health care space received some support from biotechnology after Onyx Pharma (ONXX 131.33, +44.51) rejected an unsolicited acquisition proposal from Amgen (AMGN 97.49, -1.17). The iShares Nasdaq Biotechnology ETF (IBB 178.26, +4.38) advanced 2.5%.

On the downside, telecom services and utilities ended with respective losses of 0.1% and 1.3%.

Reviewing today's economic data, the ISM Index increased to 50.9 in June from 49.0 in May, ending a one-month contraction. The consensus expected the index to increase to 50.5.

Separately, construction spending increased 0.5% in May after increasing a downwardly revised 0.1% (from 0.4%) in April. That was exactly what the consensus expected.

Surprisingly, the entire gain in construction came from the public sector. After months of weakness, that sector increased 1.8% on strong overall growth.

Tomorrow, May factory orders will be released at 10:00 ET while automakers will be reporting their June sales throughout the day.

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