Day Traders Diary

2/24/15

The major averages endured another quiet session on Tuesday before a late afternoon rally sent the S&P 500 (+0.3%) to a new record high. The price-weighted Dow (+0.5%) outperformed while the Nasdaq Composite (+0.1%) and Russell 2000 (+0.1%) struggled to keep up. Once again, trading volume was well below average with only about 700 million shares changing hands at the NYSE floor.

Equity indices spent the bulk of the day near their flat lines, seeing little reaction to Fed Chair Janet Yellen's testimony on monetary policy before the Senate Banking Committee.

While the minutes from the latest Fed policy meeting revealed a slight hawkish tilt, that tone was offset by today's comments from Chair Yellen, who reiterated the Fed's intent to remain patient before raising rates, due to weak wage growth and low inflation. In addition, Ms. Yellen indicated the Fed will change its forward guidance prior to hiking rates, and that change to the outlook will clear the way for a potential hike in any particular meeting that follows.

Although the testimony had little impact on equities, Treasuries spiked with the 10-yr yield sliding eight basis points to 1.98% as bond traders showed little concern for a rate hike in the near term. On a related note, the Dollar Index (94.44, -0.13) ended lower by 0.1% after showing strength in the early going.

Nine sectors finished the day in positive territory with rate-sensitive telecom services (+0.6%) and utilities (+0.6%) pacing the advance. The financial sector (+0.5%) also finished among the leaders, thanks in large part to shares of JPMorgan Chase (JPM 60.82, +1.47), which surged 2.5% after the company's CFO hinted at a dividend increase during the company's Investor Day.

Elsewhere among cyclical sectors, the consumer discretionary space (+0.4%) received support from homebuilders after Toll Brothers (TOL 38.49, +1.39) reported better than expected results and boosted its delivery guidance. Toll Brothers spiked 3.8% while the iShares Dow Jones US Home Construction ETF (ITB 28.15, +0.65) rose 2.4%. Also of note, Dow component Home Depot (HD 116.75, +4.47) surged 4.0% after better than expected results and a 26.0% boost to its annualized dividend ($2.36/share) overshadowed below-consensus guidance.

Meanwhile, the top-weighted technology sector (+0.2%) struggled in the early going, but was able to end not far behind the broader market. Apple (AAPL 132.17, -0.83) spent some time on each side of its flat line before ultimately settling lower by 0.6%. Chipmakers, however, displayed broad strength with the PHLX Semiconductor Index jumping 1.3%.

However, not all high-beta groups displayed comparable strength. To that point, biotechnology lagged with the iShares Nasdaq Biotechnology ETF (IBB 335.15, -2.85) ending lower by 0.8%. Biotech's underperformance kept the health care sector (-0.1%) under pressure, but the countercyclical group settled just below its flat line.

Economic data was limited to Consumer Confidence and the Case-Shiller 20-City Index:

The Conference Board's Consumer Confidence Index declined to 96.4 in February from an upwardly revised 103.8 (from 102.9) while the Briefing.com consensus expected a decline to 99.6

The Case-Shiller 20-city Home Price Index for December rose 4.5% against a 4.3% increase expected by the Briefing.com consensus. This followed the previous month's increase of 4.3%

Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while New Home Sales for January (Briefing.com consensus 471K) will be reported at 10:00 ET.

Nasdaq Composite +4.9% YTD

S&P 500 +2.8% YTD

Russell 2000 +2.4% YTD

Dow Jones Industrial Average +2.2% YTD