Day Traders Diary


The major averages began the week on a lower note as the S&P 500 shed 0.5%. Stocks spent the first half of the session in a steady retreat, but managed to regain a portion of their losses during afternoon action.

Seven of ten sectors finished in the red while technology (+0.3%), telecom services (+0.1%), and utilities (+1.2%) outperformed. The technology sectorand the Nasdaqreceived an opening boost from the shares of Apple (AAPL 490.64, +23.23) after the largest sector component reported strong weekend demand for two of its latest devices. As a result of better-than-expected sales, the company said it expects fourth quarter revenue to come in near the top end of analyst estimates. Apple settled higher by 5.0% and component suppliers like Cirrus Logic (CRUS 23.20, +1.19) and Skyworks Solutions (SWKS 25.86, +0.27) also displayed strength.

Elsewhere in technology, BlackBerry (BBRY 8.81, +0.09) rose 1.0% after agreeing to a buyout offer from a consortium led by Toronto-based Fairfax Financial. Per the agreement, BlackBerry shareholders will receive $9.00 per share, which would represent a total transaction value of roughly $4.7 billion.

The outperformance of Apple masked the losses among many other top tech components. Google (GOOG 886.50, -16.61) lost 1.8% and the newest Dow member Visa (V 196.24, -2.59) fell 1.3%. Just like Visa, the other two new Dow additionsGoldman Sachs (GS 165.25, -4.50) and Nike (NKE 68.98, -0.39)ended in the red.

Goldman Sachs settled behind the remaining Dow components as the financial sector (-1.5%) was the only group that ended with a loss larger than 1.0%. The broad weakness was brought on by a Financial Times report indicating Citigroup (C 49.57, -1.64) is likely to record a significant drop in third quarter trading revenue. Separately, afternoon reports from Reuters revealed that U.S. prosecutors in California are planning to announce charges related to mortgage-backed securities issuance against JPMorgan Chase (JPM 51.46, -1.34).

Also of note, the industrial sector (-0.1%) outperformed as two of its top components, Boeing (BA 117.51, +0.88) and General Electric (GE 24.28, +0.27), both gained near 1.0%. However, transportation companies kept the sector from turning positive as the Dow Jones Transportation Average lost 0.6%.

Countercyclical sectors ended mixed as utilities and telecom services ended ahead of the S&P while health care (-0.7%) lagged and consumer staples (-0.5%) ended in-line.

Treasuries finished near their highs with the benchmark 10-yr yield lower by two basis points at 2.72%.

Trading volume was on the light side as less than 700 million shares changed hands on the floor of the New York Stock Exchange.

In news from overseas, the German federal election saw Chancellor Angela Merkel's CDU receive the most votes, but its former coalition partner, FDP, failed to reach the 5.0% threshold needed to enter parliament. This means Ms. Merkel's party will need to find a different coalition partner. Following the CDU victory, Chancellor Merkel said she does not see the need to change Europe's policy course.

Tomorrow, the July Case-Shiller 20-city Index and July FHFA Housing Price Index will both be reported at 9:00 ET while the September consumer confidence report will cross the wires at 10:00 ET.

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