Day Traders Diary

1/28/14

The stock market halted its three-day slide on Tuesday as the S&P 500 gained 0.6%. The tech-heavy Nasdaq (+0.4%) also finished in the green, but couldn't keep pace with the S&P 500 as Apple (AAPL 506.50, -44.00) weighed following its quarterly report.
Although the largest tech company beat on earnings and revenue, investors were not pleased by below-consensus iPhone sales. In addition, disappointing guidance for the second quarter also factored into the stock's 8.0% loss.
The remainder of the technology sector (-0.7%) was a bit more mixed as large-cap names like Google (GOOG 1123.01, +21.78), Oracle (ORCL 37.10, +0.61), and Intel (INTC 24.90, +0.18) posted solid gains while Seagate (STX 51.52, -6.53) tumbled 11.3% after missing earnings estimates.
Outside of technology, most other cyclical groups finished ahead of the broader market. Financials (+1.3%) ended in the lead while the materials (+0.5%) sector was the only cyclical underperformer. U.S. Steel (X 25.34, -0.11) lost 0.4% after reporting mixed earnings.
Elsewhere, the discretionary sector advanced 0.8% with help from homebuilders after DR Horton (DHI 23.00, +2.06) reported better-than-expected results. The stock surged 9.8% while the broader iShares Dow Jones US Home Construction ETF (ITB 24.52, +0.90) jumped 3.8%.
Also of note, the industrial sector (+0.9%) rallied as transports provided support. The Dow Jones Transportation Average gained 1.1%, finishing just above its 50-day moving average.
On the countercyclical side, consumer staples (+0.7%) and health care (+1.3%) took part in the broad rally while telecom services (UNCH) and utilities (+0.4%) lagged.
Treasuries ended little changed despite showing early losses. The benchmark 10-yr yield settled at 2.75%.
Participation was well below average as only 609 million shares changed hands at the NYSE. So far in January, only six sessions have generated above-average volume with five taking place on days when the market ended lower.
Today's economic data included three reports.
Durable goods orders fell 4.3% in December after increasing a downwardly revised 2.6% (from 3.4%). The Briefing.com consensus expected durable goods orders to increase 2.1%. Boeing (BA 137.09, -0.27) reported solid aircraft orders in December, and that was expected to carry overall durable goods orders higher for the month. Yet, the official Census data showed aircraft orders, defense and nondefense, down 16.7%. A large portion of the decline was due to seasonal adjustments that naturally occur in December. Excluding transportation, durable goods orders fell 1.6% which was well below the 0.6% gain expected by the consensus. These orders were revised down from an originally reported 1.2% gain in November to a 0.1% increase.
The November Case-Shiller 20-city Home Price Index rose 13.6% while a 13.8% increase had been expected by the Briefing.com consensus. This followed the previous month's increase of 13.6%.
The January Conference Board's Consumer Confidence Index increased to 80.7 from a downwardly revised 77.5 (from 78.1) in December. The Briefing.com consensus pegged the Consumer Confidence Index at 77.5. The strengthening in consumer confidence stands in contrast to what the preliminary reading for the January University of Michigan Consumer Sentiment Index showed. That index dropped on weakness in the labor market, increased volatility in equity prices, and higher gasoline prices.
Tomorrow, the weekly MBA Mortgage Index will be reported at 7:00 ET while the FOMC will release its latest policy directive at 14:00 ET.

Nasdaq Composite -1.9% YTD
Russell 2000 -2.1% YTD
S&P 500 -3.0% YTD
Dow Jones Industrial Average -3.9% YTD

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