Day Traders Diary

10/31/14

The stock market finished the month of October with a broad rally that sent the S&P 500 higher by 1.2%. The benchmark index extended its October advance to 2.3% and ended at a fresh record high, while the Nasdaq Composite (+1.4%) outperformed to end October with a 3.1% gain.

Stocks soared out of the gate after the Bank of Japan boosted its asset purchasing program to JPY80 trillion from JPY50 trillion. The central bank said it will now target average maturities between seven and ten years (up from 7 years) and buy ETFs up to an annual amount of JPY3 trillion (up from JPY1 trillion).

The developments sent the yen into a tailspin with the dollar/yen pair surging to a session high just below the 112.50 level. The pair retreated into the 112.25 area by the end of the session, but that still represented a 2.7% advance for the dollar at the expense of the yen.

The greenback strength boosted the Dollar Index (86.87, +0.72) past its September high to its best level since the middle of 2010. This weighed on crude oil, but the energy component was able to narrow its loss to 0.6% by the close. WTI crude ended the pit session at $80.53/bbl after dipping below the $80/bbl level in the morning.

Meanwhile, the energy sector (+2.0%) began the session in the red, but was able to end the day ahead of the broader market. Better than expected earnings from Chevron (CVX 119.95, +2.75) and ExxonMobil (XOM 96.71, +2.26) sent both stocks higher by 2.4%, but the advance could not keep the growth-sensitive sector from ending the month with a 3.0% decline.

Similar to energy, the top-weighted technology sector (+1.8%) ended well ahead of the broader market amid broad strength. LinkedIn (LNKD 228.96, +26.06) and GoPro (GPRO 77.10, +8.85) surged 12.8% and 13.0%, respectively, after reporting above-consensus earnings while chipmakers also provided a significant boost. The PHLX Semiconductor Index jumped 3.9% to wipe out its October loss after being down nearly 15.0% for the month on October 15.

Interestingly, the strength in one high-beta area did not translate into comparable gains in the biotech space. The iShares Nasdaq Biotechnology ETF (IBB 296.62, -0.08) was up 2.2% at the start of the session, but a steady retreat throughout the day caused the ETF to settle just below its flat line.

Also of note, the financial sector (+1.2%) ended ahead of the broader market with Citigroup (C 53.53, +0.38) climbing 0.7% despite news indicating the company will adjust its Q3 results to reflect a $600 million legal charge. The sector added 2.9% for the month.

Treasuries ended in the red with the 10-yr yield up three basis points at 2.33%.

Participation was ahead of average with more than a billion shares changing hands at the NYSE.

Economic data included Personal Income/Spending, Core PCE Prices, Employment Cost Index, Chicago PMI, and Michigan Sentiment:
"Personal income increased 0.2% in September, down from a 0.3% increase in August, while the Briefing.com consensus expected an increase of 0.3% "Personal spending declined 0.2% in September after increasing 0.5% in August, while the consensus expected an increase of 0.1%
"Core PCE prices rose 0.1%, which is what the Briefing.com consensus expected.

"Employment Cost Index rose 0.7% in Q3 2014 after increasing by the same amount in the second quarter, while the Briefing.com consensus expected an increase of 0.5% "Wages and salaries accelerated, up 0.8% in the third quarter after a 0.6% gain in the second quarter o Benefits spending rose 0.6% in Q3 after increasing 1.0% in Q2

"Chicago PMI for October slipped to 60.5 from 60.5, while the Briefing.com consensus expected a decrease to 60.0
"The University of Michigan Consumer Sentiment report for October came in at 86.9, while the Briefing.com consensus expected the reading to be hold at 86.4
Monday's data will be limited to the September Construction Spending report (Briefing.com consensus 0.7%) and the ISM Index for October (consensus 56.2). Both data points will cross the wires at 10:00 ET.
"Nasdaq Composite +10.9% YTD
"S&P 500 +9.2% YTD
"Dow Jones Industrial Average +4.9% YTD
"Russell 2000 +0.8% YTD

All comments contained herein are for informational purposes only, and should not be considered as a solicitation to buy or sell any security. The firm does not guarantee the accuracy or completeness of the information or make any warranties regarding results from it's usage.