Day Traders Diary


The stock market ended the Thursday session on a modestly higher note despite a cautious start. The S&P 500 added 0.2%, ending at a fresh record at 2,052.75 while the Nasdaq Composite (+0.6%) and Russell 2000 (+1.1%) outperformed.

Equities faced some pressure at the start after disappointing data from overseas led to profit taking in Europe. Specifically, China's HSBC Manufacturing PMI came in at 50.0, which represents the difference between expansion and contraction, while Japan reported a slim downtick to 52.1 from 52.4. As for the eurozone, Manufacturing PMI slipped to 50.4 from 50.6 and Services PMI fell to 51.3 from 52.3.

The key indices began inching away from their lows right after the open and the cautious sentiment evaporated in a hurry after better than expected Existing Home Sales (5.26 million; consensus 5.17 million), Leading Indicators (0.9%; consensus 0.6%), and Philadelphia Fed Survey (40.8; expected 18.3) crossed the wires at 10:00 ET.

Thanks to the rebound, the S&P 500 marked its session high two hours after the start, but was unable to build on its gain. Instead, the index maintained a five-point range into the afternoon to end with a slim gain. However, conviction in the advance was not very strong with fewer than 650 million shares changing hands at the NYSE floor.

Meanwhile, the tech-heavy Nasdaq outperformed, turning its week-to-date loss to a gain of 0.6%. Shares of Apple (AAPL 116.31, +1.64) were a major source of strength, climbing 1.4%. Other large cap technology (+0.6%) components were not nearly as strong as the largest sectorand Nasdaqmember, but chipmakers picked up the slack. The PHLX Semiconductor Index jumped 0.9% with Intel (INTC 35.95, +1.60) surging 4.7% after providing revenue guidance and boosting its annual dividend to 96 cents.

Interestingly, the strength among high-beta chipmakers and small cap stocks was not met with gains in the biotech space. The iShares Nasdaq Biotechnology ETF (IBB 294.02, -0.19) shed 0.1% after failing to hold its intraday gain. As for health care (-0.4%), the largest countercyclical group tried to turn positive in the morning, but that effort was rebuffed. Similarly, the remaining countercyclical sectors ended in the red.

Turning back to the cyclical side, the energy sector (+1.1%) settled in the lead with help from crude oil, which spiked 1.8% to $75.82.bbl.

Elsewhere, the consumer discretionary sector (+0.4%) outperformed thanks to retailers after Best Buy (BBY 38.02, +2.48), Dollar Tree (DLTR 65.87, +3.24), Williams-Sonoma (WSM 75.22, +5.80), and L Brands (LB 80.08, +2.40) reported better than expected results. The four gained between 3.1% and 8.4% while the SPDR S&P Retail ETF (XRT 92.56, +1.52) advanced 1.7%.

Treasuries spent the day in the green, but ended near the bottom of the intraday range, sending the 10-yr yield lower by three basis points to 2.33%.

Participation was on the light side with fewer than 650 million shares changing hands at the NYSE.

Investors received several data points, including Initial Claims, CPI, Existing Home Sales, Philly Fed Survey, and Leading Indicators:

Weekly initial claims decreased to 291,000 from an upwardly revised 293,000 (from 290,000), while the consensus expected a decline to 285,000
Over the past few months, the initial claims level has stabilized below 300,000, and week-to-week volatility has slowed. Trends continue to point toward low layoff activity
Continuing claims fell to 2.330 million from an upwardly revised 2.403 million, representing the lowest level since December 2012
The CPI report was unchanged in October ( consensus -0.1%) while Core CPI ticked up 0.2% (consensus 0.1%)
The increase in core prices in October was the largest gain since prices rose 0.3% in May, but year-over-year price growth remains benign at 1.8%
Existing home sales increased to 5.26 million SAAR in October from an upwardly revised 5.18 million (from 5.17 million) while the consensus pegged sales at 5.17 million
Sales increased 2.6% year-over-year, which was the first gain on that basis since last October. It was also the most homes sold since September 2013
The underlying conditions remain positive for the housing industry. A sharp drop in mortgage rates and strong improvements in the labor market have made housing more affordable
The Philadelphia Fed's Business Outlook spiked to 40.8 in November from 20.7 while the consensus expected a decline to 18.3
Business activities in the Philadelphia region reached their highest point since December 1993. A total of 49% of firms saw business activities improve in November as opposed to only 9% that saw decreased activity
The Shipments Index rose to 31.9 in November from 16.6 in October. The gain in production was predicated on a spike in new orders (35.7 from 17.3)
The Leading Indicators report for October was up 0.9%, while the consensus expected a reading of 0.6%. That followed a revised 0.7% increase in September (from 0.8%)
There is no economic data of note on tomorrow's schedule.

Nasdaq Composite +12.5% YTD
S&P 500 +11.0% YTD
Dow Jones Industrial Average +6.9% YTD
Russell 2000 +0.6% 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.