Day Traders Diary

8/20/14

The stock market ended the midweek session on a mixed note. Blue chip listings bolstered the Dow Jones Industrial Average (+0.4%) and S&P 500 (+0.3%), while the Russell 2000 (-0.4%) and Nasdaq Composite (-0.02%) underperformed.
Equity indices began the day in the red, but wasted no time regaining their flat lines. Small-cap stocks were not as fortunate as the Russell 2000 spent the day in the red.
Upon returning into positive territory, the key indices were confined to narrow ranges until the minutes from the July FOMC meeting crossed the wires. The minutes revealed that many officials saw recent job gains as a potential reason to bring forward the first fed funds rate hike; however, most officials showed preference for waiting for more evidence before changing their outlook on rates.
The minutes were followed by a retreat among equities, but the slide was not sustained. The S&P 500 was trading at a fresh session high within an hour of the release. Treasuries, meanwhile, slumped in reaction to the discussion on rates. The 10-yr note fell seven ticks with its yield climbing three basis points to 2.43%.
Eight sectors ended in the green with industrials (+1.0%) spending the entire session in the lead. The cyclical sector was supported by Dow components Boeing (BA 127.35, +1.77) and General Electric (GE 26.36, +0.31) as the two added 1.4% and 1.2%, respectively. Despite the strength in the two names, the broader PHLX Defense Index (+0.9%) ended just behind the sector. Similarly, transport stocks could not keep pace with the sector as the Dow Jones Transportation Average added 0.6%.
Also of note, shares of Hertz (HTZ 30.33, -1.23) endured quite the roller coaster ride. The stock settled at $31.56 yesterday, but fell all the way to $27.47 this morning after the company said it expects to fall short of its full-year guidance, which was withdrawn. The stock spent the bulk of the day inching off its low with a big boost coming after Carl Icahn disclosed a stake in the company and said he may seek a seat on the board. Hertz ended the session with a 3.9% decline.
The consumer discretionary sector (+0.5%) finished in second place after a handful of retailers reported their quarterly results. American Eagle (AEO 12.98, +1.39), Lowe's (LOW 52.33, +0.81), and PetSmart (PETM 70.52, +0.82) all reported better than expected results, while Target (TGT 60.33, +1.08) and Staples (SPLS 11.32, -0.30) met expectations, but issued cautious guidance. For its part, the SPDR S&P Retail ETF (XRT 87.68, +0.63) gained 0.7%.
Elsewhere, the financial sector (+0.3%) was the only outperformer of note, while the remaining sectors finished near their respective flat lines. Bank of America (BAC 15.52, +0.07) was in the headlines after the Wall Street Journal reported the bank is nearing a $17 billion settlement with the Department of Justice over the sales of mortgage-backed securities.
Participation remained on the light side with just under 530 million shares changing hands at the NYSE.
Economic data was limited to the weekly MBA Mortgage Index, which rose 1.4% to follow last week's 2.7% decline.
Tomorrow, weekly initial claims will be reported at 8:30 ET (Briefing.com consensus 308K), while Existing Home Sales for July (consensus 5.00 million), August Philadelphia Fed Survey (consensus 15.5), and July Leading Indicators (expected 0.7%) will all be released at 10:00 ET.

Nasdaq Composite +8.4% YTD
S&P 500 +7.5% YTD
Dow Jones Industrial Average +2.4% YTD
Russell 2000 -0.5% YTD

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