Day Traders Diary

1/13/15

The stock market enjoyed broad-based support at the start of the Tuesday session, but the opposite was true when the session ended. The S&P 500 lost 0.3% with eight sectors settling in the red.

The final standing masks the fact that the benchmark index was up in excess of 1.0% at the start of the day. The S&P 500 spent the first 90 minutes near its high, but the absence of intraday buying interest opened the door to a retreat that accelerated when the S&P cut through its 50-day moving average (2046/2047).

Commodity-related sectors fueled the pullback from highs with energy (-0.7%) and materials (-1.2%) ending the day at the bottom of the barrel. The two groups struggled to keep pace with the market in the early going and their underperformance became more notable during the afternoon retreat. Alcoa (AA 15.80, -0.37) ended lower by 2.3% despite reporting better than expected results for the quarter. Commodities, meanwhile, endured another rough day. Copper fell 4.6% to $2.60/lb while crude oil settled lower by 0.3% at $45.92/bbl after hitting an overnight low under the $44.50/bbl level.

Like energy and materials, the remaining cyclical sectors came unglued during the afternoon, but the discretionary sector (-0.1%) was able to end ahead of the S&P 500 even as homebuilders cratered. This morning, KB Home (KBH 13.87, -2.70) rallied in reaction to its revenue beat on earnings that included a deferred tax asset valuation allowance; however, the stock plunged to its October low after management said during its post-earnings conference call that the company does not expect to hit its margin goal in 2015. Instead, first-quarter margins are expected to show a significant year-over-year decline. The news sent shares of KBH lower by 16.3% while the iShares Dow Jones US Home Construction ETF (ITB 25.99, -0.68) fell 2.6% as investors adjusted their expectations for the growth-sensitive industry.

Elsewhere, the technology sector (-0.1%) spent the day ahead of the broader market with Apple (AAPL 110.16, +0.91) contributing to the relative strength. The largest sector component jumped 0.8% after Credit Suisse upgraded the stock to 'Outperform' from 'Neutral.' Other large cap sector members ended mixed with Google (GOOGL 501.80, +4.74) climbing 1.0% and Microsoft (MSFT 46.36, -0.25) falling 0.5%.

The technology sector helped the Nasdaq Composite (-0.1%) finish the day a bit ahead of the broader market. Similarly, biotechnology stocks outperformed with the iShares Nasdaq Biotechnology ETF (IBB 314.97, -0.09) ending little changed, but the health care sector (-0.5%) settled among the laggards.

Treasuries registered modest gains with the 10-yr yield slipping one basis point to 1.90%.

Today's participation was ahead of average with more than 850 million shares changing hands at the NYSE floor.

Economic data was limited to JOLTs and Treasury Budget:

The Job Openings and Labor Turnover Survey showed that openings increased to 4.972 million from 4.830 million in November

The Treasury Budget for December showed a surplus of $1.90 billion, which followed the prior surplus of $53.20 billion 

The Briefing.com consensus expected the surplus to hit $3.00 billion

Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while December Retail Sales (Briefing.com consensus 0.1%) and December Import/Export Prices will cross the wires at 8:30 ET. The Business Inventories report for November (consensus 0.3%) will be reported at 10:00 ET while the Fed's January Beige Book will be released at 14:00 ET.

Dow Jones Industrial Average -1.2% YTD

Nasdaq Composite -1.6% YTD

S&P 500 -1.7% YTD

Russell 2000 -2.0% YTD