Day Traders Diary

2/12/15

The stock market finished the Thursday session on a broadly higher note. The S&P 500 (+1.0%) settled just six points below its record high that was registered in late December while the Nasdaq Composite (+1.2%) outperformed.

Equity indices began the day with modest gains and continued their advance in undisturbed fashion throughout the day. However, participation was limited once again with 786 million shares changing hands at the NYSE floor (50-day average 836 million).

Stocks received an opening boost after it was confirmed that leaders from France, Germany, Russia, and Ukraine struck a ceasefire agreement following a marathon negotiation. The agreement is aimed at restoring the previous Minsk accord from last September, which was violated shortly after its implementation. Despite the uninspiring precedent, hopes for a longer lasting agreement this time around contributed to a global equity rally. Italy's MIB (+2.1%) led the way in Europe while Germany's DAX advanced 1.6%.

As for Greece, Bloomberg reported that Germany is ready to soften its negotiating stance while Eurogroup chief Jeroen Dijsselbloem and Greek Prime Minister Alexis Tsipras agreed to begin a "technical assessment" of the common ground between Greece and the current program in preparations for the next Eurogroup meeting on Monday.

Eight of ten sectors ended the day in positive territory with materials (+1.8%), technology (+1.6%), and energy (+1.3%) spending the day in the lead. Other cyclical sectors posted slimmer gains, but most ended ahead of the broader market while industrials (+0.9%) finished just behind the S&P 500.

Notably, the top-weighted technology sector was underpinned by Cisco Systems (CSCO 29.46, +2.53), which surged 9.4% after beating estimates and raising its quarterly dividend 10.5% to $0.21/share. In turn, Cisco's outperformance helped the Nasdaq spend the day ahead of the broader market.

Meanwhile, another Nasdaq component—Tesla (TSLA 202.99, -9.81)—lost 4.6% in reaction to disappointing results due to below-consensus deliveries in Q4.

High-beta chipmakers also contributed to the strength of the tech-heavy index after NVIDIA (NVDA 22.30, +1.49) reported better than expected results that sparked price target hikes at Canaccord, Needham, and Topeka, among others. The stock spiked 7.2% while the PHLX Semiconductor Index rose 1.6%.

Elsewhere, the energy sector received support from crude oil, which spent the day in positive territory. The energy component notched an intraday high near $51.39/bbl and settled near that level with a 4.7% gain for the day.

In M&A news, Expedia (EXPE 89.57, +11.35) agreed to acquire Orbitz (OWW 11.72, +2.10) for $12.00/share, which boosted other travel-related names. Priceline.com (PCLN 1091.95, +31.89) was a notable outperformer, climbing 3.0%.

Also of note, the price-weighted Dow spent the day behind the broader market due to a 6.4% decline in American Express (AXP 80.48, -5.53) after the company announced it will not renew its co-brand and merchant acceptance agreements with Costco (COST 147.76, +0.30) once the current agreement expires on March 31, 2016.

Treasuries traded lower in overnight action, but surged following today's disappointing Retail Sales report. The 10-yr note inched away from its high, but still ended in the green with the benchmark yield lower by a basis point at 1.98%.

Economic data included Initial Claims, Retail Sales, and Business Inventories:

The weekly initial claims level increased to 304,000 from an upwardly revised 279,000 (from 278,000) while the Briefing.com consensus expected an increase to 285,000 

The continuing claims level declined to 2.354 million from an upwardly revised 2.405 million (from 2.400 million) while the consensus expected a decline to 2.395 million

Retail sales declined 0.8% in January after declining an unrevised 0.9% in December while the Briefing.com consensus expected a decline of 0.4% 

Excluding autos, sales fell an even larger 0.9% in January after declining by the same amount in December while the consensus expected these sales to also decline 0.4% in January

Core retail sales, which exclude motor vehicle dealers, gasoline stations, and building material and supply stores, increased by a very modest 0.2% in January, which is even less impressive when compared to the sizable 0.7% increase in aggregate earnings reported in the January employment report

Business inventories increased 0.1% in December following a 0.2% increase in November while the Briefing.com consensus expected an increase of 0.2% 

The changes in inventories for manufacturers (-0.3%) and merchant wholesalers (0.1%) were known prior to the release. The only new information was that retailer inventories increased 0.5% in December after declining 0.3% in November

Tomorrow, Import/Export Prices for January will be reported at 8:30 ET while the advance reading of the Michigan Sentiment Index will be released at 10:00 ET (Briefing.com consensus 98.3).

Nasdaq Composite +2.6% YTD

S&P 500 +1.4% YTD

Dow Jones Industrial Average +0.8% YTD

Russell 2000 +0.9% YTD