Day Traders Diary

7/25/14

The stock market capped the trading week with losses across the major averages. The S&P 500 fell 0.5% to surrender its weekly gain, while the Dow Jones Industrial Average (-0.7%) and Russell 2000 (-0.9%) underperformed.The two indices posted respective losses of 0.8% and 0.6% for the week.
Equity indices were pressured from the get-go after several heavyweights disappointed the market with their earnings and/or guidance, which led to some broader profit-taking. After the opening slide was complete, the major
averages began inching higher, but were knocked to fresh lows in short order
when it was reported that European Council President Herman Van Rompuy suggested the next round of sanctions against Russia should target oil (but not gas) companies.
The retreat in equities signaled the presence of underlying concerns that a new round of economic sanctions could have a boomerang effect on the global economy. For its part, oil futures responded by spiking off their lows to end little changed at $102.10/bbl.
Eight of ten sectors finished in the red with the consumer discretionary space (-1.2%) at the bottom of the leaderboard. The sector, and Nasdaq Composite (-0.5%), were pressured by shares of Amazon.com (AMZN 324.01, -34.60), which fell 9.7% in reaction to a bottom-line miss and cautious guidance. Other retailers did not escape unscathed with the SPDR S&P Retail ETF (XRT 84.33, -1.00) sliding 1.2%.
Elsewhere among cyclical groups, the top-weighted S&P 500 sector-technology (-0.2%)-ended ahead of the broader market despite a 3.6% drop in Visa (V 214.77, -7.97). The payment processor reported better than expected
earnings, but its guidance was a point of concern for investors.
Deeper in the tech sector, high-beta chipmakers displayed broad losses after
Freescale Semiconductor (FSL 19.98, -2.11), Maxim Integrated (MXIM 29.38, -3.56), and KLA-Tencor (KLAC 71.60, -1.42) reported disappointing results. The trio lost between 1.9% and 10.8%, while the PHLX Semiconductor Index fell 2.0%.
Even though the tech sector finished ahead of the broader market, other heavily-weighted sectors like energy (-0.8%) and financials (-0.6%) prevented the S&P 500 from staging an afternoon recovery.
The financial sector settled just behind the S&P 500, which was fitting as both the economically-sensitive sector and the benchmark index ended the week unchanged. Insurer Chubb (CB 89.62, -3.14) was a notable
underperformer, falling 3.4% in reaction to a lowered full-year outlook on the back of a disappointing second quarter and larger than expected insurance payouts.
Although the market ended near its lows, that was not the case for El Pollo Loco (LOCO 24.03, +9.03), which made its debut today. The newcomer soared 60.2% after its IPO priced at $15.00 per share and opened at $19.00.
Treasuries rallied into the early afternoon and the 10-yr note settled on its high with the benchmark yield down four basis points at 2.47%.
Participation was well below average with under 558 million shares changing hands at the NYSE, suggesting there was no 'rush for the exits' taking place.
On the economic front, the durable orders report for June surpassed estimates (+0.7% versus Briefing.com consensus 0.3%), but shipments of goods declined 1.0%, which will be a negative for Q2 GDP.
Monday's data will be limited to the Pending Home Sales report for June (Briefing.com consensus -0.8%), which will be released at 10:00 ET.


S&P 500 +7.0% YTD
Nasdaq Composite +6.5% YTD
Dow Jones Industrial Average +2.3% YTD
Russell 2000 -1.5% YTD

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