Day Traders Diary


The stock market finished an upbeat week on a mixed note. The S&P 500 added just under a point, holding its weekly gain at 1.0% while the Nasdaq lost 0.4%.
The major averages began the day on an upbeat note, but relinquished their opening gains during the first 90 minutes of action. The early sentiment was boosted by a better-than-expected nonfarm payrolls report for February (175K versus consensus 163K), but a closer look into the report suggested that the weather excuse, which has been commonplace for the past several weeks, may have been overused in justifying some of the disappointing economic data received in recent weeks.
Stocks retreated from their opening highs with the Nasdaq pacing the slide. Specifically, biotechnology underperformed for the second day in a row, which fueled much of the Nasdaq weakness. The iShares Nasdaq Biotechnology ETF (IBB 259.40, -1.74) lost 0.7% after being down as much as 2.6% at the start of the session. The biotech ETF posted a 1.9% decline for the week, but remains up 14.2% in 2014.
Although biotechnology was able to climb off its lows, the rebound coincided with selling in the traditional technology sector (-0.3%). As a result, the Nasdaq was pressured throughout the day.
Even though heavily-weighted sectors like technology and health care (-0.2%) weighed on the broader market, the S&P 500 held up relatively well thanks to the relative strength of the financial sector (+0.5%), which continued its recent outperformance. The influential sector finished the week with a gain of 3.0%.
Elsewhere among cyclical groups, energy (+0.4%) and industrials (+0.3%) outperformed while consumer discretionary (-0.1%) and materials (-0.5%) lagged. The energy sector posted a modest gain as crude oil rose 1.0% to $102.54/bbl. Despite today's increase, the energy space remains the weakest cyclical group of the year, down 1.8%.
Industrials, meanwhile, drew strength from transports. The Dow Jones Transportation Average added 0.4% after marking a fresh intraday record high at 7627.44.
Despite the continued uncertainty surrounding the situation in Ukraine, stocks climbed into the close, suggesting participants remained hopeful that a worst case scenario would be avoided. The sentiment was a bit different in Europe where major regional indices finished on their lows after a Gazprom spokesman said the company could stop delivering natural gas to Ukraine since the country is behind on its payments. The news rattled the region considering Gazprom is a major supplier to the entire European continent and supply disruptions could affect other economies.
The Treasury market, however, did not reflect a flight to safety as the 10-yr note finished in the red with its yield up five basis points at 2.79%.
Participation was a bit below average as 710 million shares changed hands at the NYSE.
Taking a look at economic data:
Nonfarm payrolls added 175,000 jobs in February after adding an upwardly revised 129,000 (from 113,000) in January. The consensus expected an increase of 163,000. Private payrolls were a little lighter, up 162,000 in February after adding 145,000 in January. The consensus expected private payrolls to increase by 170,000. Over the last several weeks, economists have pointed toward the winter weather as the reason for the recent economic slowdown. The above consensus result in the February employment report refutes that theory. Sectors that are normally impacted by weather events, such as construction of buildings (+100), reported positive payroll gains. These sectors should have seen a sizable pullback if weather was the root cause of the economic malaise.
The U.S. trade deficit widened in January to $39.10 billion from an upwardly revised $39.00 billion (from $38.7 billion) in December. The consensus expected the trade deficit to fall to $37.30 billion. The goods deficit rose to $59.30 billion from $58.70 billion, a gain of $0.70 billion. The services surplus increased by $0.50 billion in January to $20.20 billion. Exports increased 0.6% in January to $192.50 billion. Almost all of the increase can be attributed to a $1.80 billion increase in exports of nonmonetary gold and a $0.20 billion increase in artwork sales.
Consumer credit increased by $13.70 billion in January after increasing a downwardly revised $15.90 billion (from $18.80 billion) in December. The consensus expected consumer credit to increase by $11.80 billion in January.
There is no economic data on Monday's schedule.

Nasdaq Composite +3.8% YTD
Russell 2000 +3.8% YTD
S&P 500 +1.6% YTD
Dow Jones Industrial Average -0.8% YTD

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