Day Traders Diary


Equity indices registered modest gains on Thursday ahead of the Nonfarm Payrolls report for October ( consensus 235,000), which will be released tomorrow. The S&P 500 added 0.4% with seven sectors ending in the green.

The key indices spent the entire session in a slow and steady climb off their opening lows, but the same could not be said for the greenback.

The Dollar Index (88.08, +0.64) spiked 0.7% after the European Central Bank released its latest policy statement. Although the central bank did not announce any changes, the euro tumbled below 1.2380 against the dollar after Mario Draghi said the bank will begin purchases of asset-backed securities soon and will not hesitate to introduce additional easing if needed. The reminder of willingness to consider additional measures boosted European equities and helped U.S. futures climb off their overnight lows.

However, it should be noted that the ECB has already discussed its intentions to begin ABS purchases in the past. Furthermore Mr. Draghi's comments about additional easing contrasted with Tuesday's Reuters story, which claimed nearly half of the ECB board opposes the implementation of a sovereign quantitative easing program.

The resulting dollar strength weighed on crude oil (77.90, -0.78), but the energy sector (+1.3%) ended in the lead despite showing early weakness. The sector climbed to highs during the final hour of the session, rising above the industrial space (+1.1%), which led for the bulk of the day.

Industrials received strong support from General Electric (GE 26.36, +0.54) as the top-weighted sector component reclaimed its 200-day moving average, spiking 2.1% to levels last seen in mid-September. Transports also fared well with the Dow Jones Transportation Average jumping 1.3%.

Elsewhere among cyclical sectors, consumer discretionary (+0.9%) and materials (+0.8%) displayed strength while financials (+0.1%) and technology (-0.1%) lagged.

The materials sector was boosted by miners after Randgold Resources (GOLD 64.61, +5.45) reported earnings. The company missed bottom-line estimates, but investors cheered news indicating Randgold has closed its revolving credit facility. The stock spiked 9.2% while the Market Vectors Gold Miners ETF (GDX 17.21, +0.62) jumped 3.7%.

On the downside, technology (-0.1%) spent the day in negative territory after Qualcomm (QCOM 70.57, -6.63) reported disappointing results. Shares of QCOM plunged 8.6% while the PHLX Semiconductor Index lost 0.9%.

The losses among chipmakers weighed on the Nasdaq, but the index caught up to the broader market during the final hour. Biotechnology factored into the afternoon strength with the iShares Nasdaq Biotechnology ETF (IBB 293.32, +4.42) climbing 1.5%. For its part, the health care sector (+0.6%) settled ahead of the remaining countercyclical groups.

Treasuries ended on their lows with the 10-yr yield up four basis points at 2.38%.

Participation was ahead of average with more than 730 million shares changing hands at the NYSE floor.

Economic data included Initial Claims, Productivity/Labor Cost data, and Challenger Job Cuts:

Nonfarm labor productivity increased 2.0% in the third quarter, down from an upwardly revised 2.9% (from 2.3%) gain in the second quarter
The consensus expected an increase of 1.5%
Output growth decelerated in the third quarter, increasing 4.4% after a 5.5% increase in the second quarter, which was in-line with third quarter GDP growth
The relatively weaker output level resulted in a modest acceleration in unit labors costs, up 0.3% after declining 0.5% in Q2 2014
Initial Claims declined to 278,000 from a revised rate of 288,000 (from 287,000), while the consensus expected a reading of 285,000
Claims have held below the 300,000 mark for the past several weeks, setting expectations for relatively strong job growth
The Challenger Job Cuts report for October rose 11.9% to follow the prior decline of 24.4%
Tomorrow, the October Nonfarm Payrolls report ( consensus 235,000) will be released at 8:30 ET while the Consumer Credit report for September (consensus $16.00 billion) will cross the wires at 15:00 ET.

Nasdaq Composite +11.1% YTD
S&P 500 +9.9% YTD
Dow Jones Industrial Average +5.9% YTD
Russell 2000 +0.7% YTD

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