Day Traders Diary

1/16/15

The major averages snapped their five-day losing streak with a broad-based advance on Friday. The S&P 500 (+1.3%) reclaimed its 100-day moving average (2,007) and narrowed its weekly decline to 1.2%.

The stock market was on shaky footing in the early going, but the overall risk tolerance was improved by a rebound in crude oil, which continued climbing throughout the session to end higher by 4.6% at $48.50/bbl. That advance bolstered the energy sector (+3.2%), which spent the day in the lead.

Meanwhile, the remaining cyclical groups ended a bit closer to their flat lines. The materials sector (+1.7%) outperformed with help from steelmakers and miners while the discretionary sector (+1.3%) settled in line with the broader market. As for the remaining three growth-sensitive groups, financials (+1.2%), industrials (+0.7%), and technology (+0.9%) spent the day behind the broader market.

The financial sector could not catch up to the S&P 500 as Goldman Sachs (GS 177.23, -1.26) weighed. The stock fell 0.7% despite better than expected results from the investment bank. Also of note, foreign exchange broker FXCM (FXCM 12.63, 0.00) agreed to terms on a $300 million lifeline provided by Leucadia National (LUK 21.84, +0.20) after yesterday's surge in the Swiss franc caused about $225 million in negative client balances at FXCM. Shares of FXCM were halted throughout the session after surrendering almost 90.0% in pre-market action.

Elsewhere, the technology sector struggled to keep pace with the market as Apple (AAPL 105.94, -0.88) weighed. The largest sector component lost 0.8% while most other heavily-weighted tech names settled with gains. On the earnings front, Intel (INTC 36.45, +0.26) gained 0.7% after beating bottom-line estimates. For its part, the PHLX Semiconductor Index (+1.1%) ended just behind the S&P 500.

Over on the countercyclical side, consumer staples (+0.8%) and utilities (+0.9%) underperformed throughout the day while telecom services (+1.7%) and health care (+1.9%) spent the day among the leaders. The health care sector was bolstered by high-beta biotechnology names, evidenced by a 3.3% gain in the iShares Nasdaq Biotechnology ETF (IBB 317.82, +10.12). The ETF was able to add 1.4% for the week versus a slim uptick of 0.2% for the health care sector.

Treasuries notched their highs in the early morning before spending the session in a steady retreat that sent the benchmark 10-yr yield higher by 11 basis points to 1.82%.

Friday's participation was ahead of average with 950 million shares changing hands at the NYSE floor.

Economic data included CPI, Industrial Production, and Michigan Sentiment:

The CPI declined 0.4% in December after declining 0.3% in November while the Briefing.com Consensus expected a decline of 0.4% 

Prices are up only 0.8% year-over-year, which is the smallest increase since October 2009

The energy index, which has fallen for the past six consecutive months, declined 4.7% in December

Food prices increased 0.3% in December, up from a 0.2% increase in November

Excluding food and energy, core CPI was flat in December (consensus +0.1%) after increasing 0.1% in November

Industrial production declined 0.1% in December after increasing an unrevised 1.3% in November (Briefing.com consensus -0.1%) 

The decline in industrial production can be blamed on warmer-than-normal temperatures that reduced the demand for heating. According to the National Climatic Data Center, December 2014 was the second warmest December on record. That was a large reversal from November, which was the coldest November since 2000. The shift in temperatures resulted in a 7.3% decline in utilities production

Capacity utilization hit 79.7% while the Briefing.com consensus expected a reading of 79.9%

The University of Michigan Consumer Sentiment Index jumped to 98.2 in the preliminary January reading from 93.6 in December while the Briefing.com consensus expected an increase to 94.1 

That was the highest reading since the index reached 103.8 in January 2004

Bond and equity markets will be closed on Monday for Martin Luther King Day.

On Tuesday, the NAHB Housing Market Index will be released at 10:00 ET.

Dow Jones Industrial Average -1.8% YTD

S&P 500 -1.9% YTD

Nasdaq Composite -2.2% YTD

Russell 2000 -2.5% YTD