Day Traders Diary

12/31/14

The stock market ended the last session of 2014 on a lower note. The S&P 500 lost 1.0%, but that did not stop the benchmark index from gaining 11.4% over the course of 2014. Meanwhile, the tech-heavy Nasdaq ended the session (-0.9%) and the year (+13.4%) ahead of the S&P 500.

Before we delve into the details of today's trading day, it is important to note that trading volume at the NYSE was among the lowest of the year (650 million), suggesting few carbon-based life forms took part in the final affair of the year.

All ten sectors settled in the red with utilities (-1.9%) ending at the bottom of the leaderboard. In all likelihood, today's selling was a function of profit taking after the countercyclical sector led the 2014 market rally with a gain of 24.3%.

The remaining groups did not fare much better. The top-weighted technology sector (-1.2%) was among the early leaders, but began fading from its high not long before noon ET, dragging the broader market down with it. Apple (AAPL 110.38, -2.14) began the day with a slim gain, but found itself in the red within the first 45 minutes of the session. The largest sector component continued retreating throughout the day while other large cap tech names followed suit. Shares of Apple fell 1.9% today, but still soared nearly 38.0% in 2014. Chipmakers, meanwhile, outperformed with the PHLX Semiconductor Index losing 0.6%.

The outperformance of chipmakers helped the Nasdaq exhibit some relative strength, but the index also received a helping hand from biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 303.35, -1.27) shed 0.4% while the health care sector (-1.0%) could not stay out of the red, narrowing its 2014 advance to 23.3%.

Elsewhere among cyclical groups, financials (-1.2%) lagged while the energy sector lost 0.8% to widen its 2014 decline to 10.0% amid another volatile day in oil trading pits. WTI crude dipped below the $52.60/bbl mark ahead of the close, but rocketed back to its session high to end the day lower by 1.0% at $53.49/bbl.

Also of note, the consumer discretionary sector (-0.4%) ended ahead of other groups. Homebuilders and retailers were responsible for the outperformance as iShares Dow Jones US Home Construction (ITB 25.88, +0.20) gained 0.8% while SPDR S&P Retail ETF (XRT 96.01, -0.28) slipped 0.3%.

Treasuries capped a strong year with another rally. As a result, the benchmark 10-yr yield fell two basis points to 2.17%, finishing 87 basis points below its close from December 31, 2014. On a somewhat related note, the Dollar Index (90.27, +0.28) climbed 0.3% to end the year at its best level since early 2006.

Economic data included Initial Claims, Chicago PMI, and Pending Home Sales:

The initial claims level increased to 298,000 for the week ending December 27 from an upwardly revised 281,000 (from 280,000) while the Brieifng.com consensus expected an increase to 290,000
The Department of Labor reported that there were no special factors driving the increase in unemployment insurance filings; however, it is possible that the Christmas holiday played at least a small part in the increase
The continuing claims level fell to 2.353 million from an upwardly revised 2.406 million (from 2.403 million) while the consensus expected a decline to 2.375 million
After four consecutive months above 60, the Chicago PMI fell from 60.8 in November to 58.3 in December while the Briefing.com consensus expected a decline to 60.0
Pending home sales for November rose 0.8%, which was in-line with the Briefing.com consensus
Friday's data will be limited to the ISM Index for December (Briefing.com consensus 57.5) and the November Construction Spending report (consensus 0.1%). Both reports will be released at 10:00 ET.

Nasdaq Composite +13.4% YTD
S&P 500 +11.4% YTD
Dow Jones Industrial Average +7.5% YTD
Russell 2000 +3.6% YTD