Day Traders Diary


The S&P 500 settled lower by 0.4% as seven of ten sectors registered losses.

Equities began the session in negative territory after the third consecutive decline in Japan's Nikkei contributed to the cautious sentiment.

With few earnings of note and no market-moving economic data, the session proved to be relatively quiet as investors prepared for what promises to be an active week. On Wednesday morning, the advance reading of second quarter GDP will be reported while the afternoon will bring the latest policy statement from the Federal Reserve. In addition, Friday morning will bring the July employment report while quarterly earnings will continue pouring in throughout the week.

Stock indices spent the entire session in negative territory as a handful of influential groups weighed. Consumer discretionary, energy, and financial sectors lost between 0.6% and 0.8% with energy leading to the downside.

The energy space fell 0.8% as crude oil endured a volatile session, alternating between gains and losses before ending lower by 0.3% at $104.42 per barrel.

Meanwhile, another commodity-related sector, materials, received a late afternoon boost after CNBC reported that Dan Loeb's Third Point has taken a stake in CF Industries (CF 202.30, +21.30), which surged 11.8% on the news. As a result, the materials sector was the only cyclical group to settle in the green.

Elsewhere, the underperformance of all major banks weighed on the financial sector, which shed 0.8%.

Also of note, discretionary shares displayed broad weakness. Homebuilders ended generally lower even after the June pending home sales report surpassed estimates (-0.4% actual, -1.7% consensus). The iShares Dow Jones US Home Construction ETF (ITB 21.75, -0.08) slipped 0.4%.

Interestingly, industrials (-0.3%) finished ahead of the S&P despite the underperformance of transportation-related names. The Dow Jones Transportation Average lost 1.1% as airlines lagged. Alaska Air (ALK 59.55, -3.03) and United Continental (UAL 34.85, -1.40) settled lower by 4.8% and 3.9%, respectively.

While today's session did not produce much excitement, investors received a heavy dose of M&A news. Omnicom Group (OMC 64.75, -0.36) and Publicis Groupe announced a merger of equals while Saks (SKS 15.95, +0.64) received an offer from Hudson's Bay to be acquired for $16 per share, which represents a 4.5% premium to Friday's closing price. Separately, Perrigo (PRGO 125.17, -9.06) agreed to acquire Elan (ELN 15.46, +0.53) for $16.50 per share (10.5% premium) and Michael Baker (BKR 40.39, +10.79) entered into an agreement to be acquired by Integrated Mission Solutions for $40.50 per share. The purchase price represents a 36.8% premium.

Tomorrow, the May Case-Shiller 20-city Index will be reported at 9:00 ET while July consumer confidence will cross the wires at 10:00 ET. On the earnings front, Aetna (AET 63.40, -1.30), Goodyear (GT 17.04, +0.26), and Pfizer (PFE 29.54, +0.17) will report their results ahead of the opening bell.

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