Day Traders Diary

2/25/15

The stock market ended the midweek session on a flat note after spending the trading day in a narrow range. The S&P 500 shed 0.1% while the Nasdaq (-0.02%) registered its first loss since February 9.

Once again, today's session featured below-average activity with only 688 million shares changing hands at the NYSE floor, which was the lowest total registered so far this week.

Equity indices faced some selling pressure at the start with the top-weighted technology sector (-0.7%) responsible for the early weakness. Specifically, Hewlett-Packard (HPQ 34.67, -3.82) pressured the sector after reporting uninspiring results for the quarter. The Dow component plunged 9.9% after its one-cent beat was overshadowed by a 4.7% year-over-year decline in revenue and below-consensus guidance.

Despite the opening weakness, the market was able to reclaim its early loss by midday, but renewed selling in the tech sector sent equity indices to fresh lows during the afternoon. The largest stock by weight—Apple (AAPL 128.73, -3.44)—fell 2.6% to lead the afternoon pullback. Despite today's loss, Apple remains higher by 9.9% since the end of January.

Meanwhile, the remaining cyclical sectors finished closer to their flat lines. Industrials (-0.1%) and materials (-0.3%) settled in the red while energy (+0.4%), financials (+0.1%), and consumer discretionary (+0.8%) outperformed.

The energy sector eked out a modest gain while crude oil spiked 3.6% to $51.01/bbl even though today's Energy Information Administration's storage report showed a larger than expected inventory build of 8.427 million barrels (consensus 4.2 million). WTI crude notched a session low under $49.00/bbl after the inventory report before climbing to a fresh high.

For its part, the discretionary sector received solid support from momentum names like Amazon.com (AMZN 385.37, +6.78), Netflix (NFLX 478.33, +3.45), and Priceline (PCLN 1250.86, +31.07) while homebuilders lagged despite a better than expected New Home Sales report. The iShares Dow Jones US Home Construction ETF (ITB 27.76, -0.39) lost 1.4%.

On the flip side, the industrial sector settled just ahead of the broader market, but transport stock lagged with the Dow Jones Transportation Average sliding 0.5%.

Countercyclical sectors ended in mixed fashion with the utilities space (-1.6%) widening its February decline to 6.2%.

Treasuries settled near their highs after climbing off their intraday lows with the 10-yr yield slipping two basis points to 1.96%. The Treasury market showed little reaction to Fed Chair Yellen's testimony in front of the House Financial Services Committee, which struck a similar tone to remarks made yesterday before the Senate Banking Committee.

Economic data was limited to New Home Sales and MBA Mortgage Index:

New home sales fell 0.2% in January to 481,000 from an upwardly revised 482,000 (from 481,000) while the Briefing.com consensus expected a drop to 470,000 

For most of 2014, home sales hovered near 430,000 and showed little volatility. Over the last two months, however, sales have broken out of their doldrums.

The move correlates with improvements in the NAHB Home Builders Index, which showed increasing strength in both current and expected sales. It also comes during a time when the average conventional mortgage rate fell below 4.00%

The weekly MBA Mortgage Index fell 3.5% to follow last week's 13.2% plunge

Tomorrow, weekly Initial Claims (Briefing.com consensus 290K), January CPI (consensus -0.6%), and Durable Orders for January (expected 1.7%) will be reported at 8:30 ET while the December FHFA Housing Price Index will be released at 9:00 ET.

Nasdaq Composite +4.9% YTD

S&P 500 +2.7% YTD

Russell 2000 +2.5% YTD

Dow Jones Industrial Average +2.3% YTD