Day Traders Diary

1/22/14

Equities endured an uninspiring Wednesday session, which unfolded in similar fashion to Tuesday's affair. Like yesterday, the major averages ended mixed with the Dow Jones Industrial Average (-0.3%) coming out on the losing end while the Nasdaq (+0.4%) and S&P 500 (+0.1%) eked out modest gains.
The price-weighted Dow spent the entire session in the red as 19 of its 30 components registered losses. Most notably, the second-largest index member, IBM (IBM 182.25, -6.18), plunged 3.3% after beating its Capital IQ earnings estimate by 13 cents on below-consensus revenue. Despite the bottom-line beat, the report was scrutinized due to the company accounting for a lower tax rate than in previous quarters.
On the upside, another large index member, United Technologies (UTX 116.12, +1.13), gained 1.0% after reporting a bottom-line beat on below-consensus revenue. Furthermore, the stock factored into the outperformance of the industrial sector (+0.2%), which also drew strength from transports. The Dow Jones Transportation Average jumped 1.1% with help from railroads after Norfolk Southern (NSC 92.94, +4.23) reported an earnings beat.
Like industrials, most other cyclical sectors finished just ahead of the broader market. The discretionary sector (+0.3%) rallied despite cautious action among retailers after Coach (COH 49.38, -3.17) reported disappointing earnings and said its North American comparable-store sales tumbled 13.6% during the quarter.
Elsewhere, energy (+0.3%) climbed as crude oil rose 1.8% to $96.72/bbl while materials (-0.9%) lagged after Freeport-McMoRan (FCX 34.52, -0.74) reported a top-line miss.
The remaining cyclical groups, financials (+0.1%) and technology (unch) ended little changed.
On the countercyclical side, health care (+0.1%) and utilities (+0.1%) finished in-line with the S&P 500 while consumer staples (-0.1%) and telecom services (-0.7%) ended in the red.
Treasuries finished in the red as the 10-yr yield ticked up three basis points to 2.86%. Trading volume was well below average with only 616 million shares changing hands at the NYSE.
Today's economic data was limited to the weekly MBA Mortgage Index, which rose 4.7% to follow last week's 11.9% increase.
Tomorrow, weekly initial claims will be reported at 8:30 ET while the November FHFA Housing Price Index will be released at 9:00 ET. December Existing Home Sales and Leading Indicators will cross the wires at 10:00 ET.

Nasdaq Composite +1.6% YTD
Russell 2000 +1.6% YTD
S&P 500 -0.2% YTD
Dow Jones Industrial Average -1.2% YTD

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