Day Traders Diary

10/18/13

The S&P 500 registered its third consecutive gain, rising 0.7% to extend its weekly advance to 2.4%. However, the Nasdaq (+1.3%) was today's standout as Google (GOOG 1011.41, +122.61) made a significant contribution to the relative strength of the tech-heavy index. Shares of Google surged 13.8% after the company surpassed earnings expectations by 37 cents.

Thanks to Google's surge, the tech sector settled in the lead with a gain of 1.8%. Even though the sector ended sharply higher, some other top members underperformed. Qualcomm (QCOM 68.40, -0.30) shed 0.4% and IBM (IBM 173.78, -1.05) fell 0.6% after plunging 6.4% yesterday. Chipmakers sat out the rally as Intel (INTC 23.88, -0.05) slipped 0.2% while the broader PHLX Semiconductor added 0.3%.

Outside of technology, the industrial sector (+1.1%) was the only group that ended with a gain larger than 1.0%. Top sector component General Electric (GE 25.55, +0.87) jumped 3.5% after beating earnings expectations by a penny on a 1.5% year-over-year decline in revenue. Transports also contributed to the sector's strength as the Dow Jones Transportation Average advanced 1.2%. Kansas City Southern (KSU 117.35, +4.19) was the top index component, rising 3.7% despite reporting a bottom-line miss.

Elsewhere, the energy space (+0.9%) outperformed with Schlumberger (SLB 93.99, +2.56) providing a measure of support after beating on earnings. Crude oil ended with a modest gain of 0.2% at $100.84 per barrel.

Also of note, the financial sector (+0.3%) underperformed even as Morgan Stanley (MS 29.69, +0.76) rose 2.6% after beating on earnings and revenue. JPMorgan Chase (JPM 54.30, +0.09) received a late-afternoon boost off its lows amid reports of the bank reaching a $4 billion settlement with the Federal Housing Finance Agency after the FHFA sought as much as $6 billion in damages. Even though financials lagged, the sector was the top performer of the week, rising 5.1%.

On the downside, the health care space (-0.4%) ended in the red. Intuitive Surgical (ISRG 376.52, -22.61) weighed following its top-line miss while biotechnology underperformed as well. The iShares Nasdaq Biotechnology ETF (IBB 206.78, -1.59) lost 0.8%.

Treasuries ended little changed with the 10-yr yield at 2.59%.

Trading volume was aided by options expiration as nearly 900 million shares changed hands on the floor of the New York Stock Exchange.

September existing home sales will be reported on Monday at 10:00 ET. On the earnings front, McDonald's (MCD 95.20, -0.27), Halliburton (HAL 52.47, +0.75), and SAP (SAP 73.75, +0.86) will report their quarterly results prior to the opening bell.

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