Day Traders Diary

5/28/14

The stock market endured a quiet session that had the S&P 500 confined to a seven-point range. The benchmark index shed 0.1%, while the Dow Jones Industrial Average (-0.3%) and Nasdaq Composite (-0.3%) followed not far behind. Small caps, however, saw some additional weakness as the Russell 2000 lost 0.5%.
All in all, it is worth pointing out that today's lack of aggressive selling or buying followed four consecutive advances that sent the S&P 500 higher by 2.1%. Furthermore, there was no concerted leadership as the top-weighted sectors ended the day in the red. On that note, consumer discretionary (-0.1%), financials (-0.3%), health care (-0.3%), and technology (-0.3%) all struggled to keep pace with the S&P 500.
The discretionary sector had the best showing of the four after seeing some volatility among retailers and homebuilders. In the retail space, Brown Shoe (BWS 29.34, +2.90), and Michael Kors (KORS 97.01, +1.27) posted respective gains of 10.8% and 1.3% after beating earnings estimates, while Chico's FAS (CHS 15.14, -0.47) missed estimates. The stock fell 3.0%, while the overall industry group did not fare much better. The SPDR S&P Retail ETF (XRT 82.93, -0.77) lost 0.9%.
Also of note, homebuilders displayed intraday strength following above-consensus quarterly results from Toll Brothers (TOL 36.38, +0.74). Shares of TOL jumped 2.1%, while the iShares Dow Jones US Home Construction ETF (ITB 24.03, -0.04) surrendered its modest gain just ahead of the close.
Elsewhere, a pocket of strength among transports allowed the Dow Jones Transportation Average (+0.7%) to climb to a fresh all-time high. The bellwether complex extended its year-to-date gain to 9.1% and underpinned the industrial sector (+0.1%), which outperformed throughout the session.
Interestingly, the recent strength in the transports has not jived with the economic slowdown argument that has been used to explain the continued strength in Treasuries. The Treasury market rallied once again today with the 10-yr note climbing 21 ticks. As a result, the benchmark 10-yr yield fell eight basis points to 2.44%, ending at levels not seen in nearly a year.
Today's participation marked an improvement over last week, but remained below average as 621 million shares changed hands at the NYSE.
Economic data was limited to the weekly MBA Mortgage Index, which fell 1.2% to follow last week's uptick of 0.9%.
Tomorrow, weekly initial claims (Briefing.com consensus 318,000) and the second estimate of Q1 GDP (consensus -0.5%) will be reported at 8:30 ET, while the Pending Home Sales report for April (consensus 1.0%) will be released at 10:00 ET.

S&P 500 +3.3% YTD
Dow Jones Industrial Average +0.3% YTD
Nasdaq Composite +1.2% YTD
Russell 2000 -2.1% YTD

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