Day Traders Diary

3/3/15

The stock market endured a broad-based retreat on Tuesday that caused the S&P 500 (-0.5%) to surrender the bulk of its advance from Monday. The benchmark index settled ahead of the Nasdaq Composite (-0.6%) with eight sectors registering losses. All in all, it is worth pointing out that today's pullback occurred after the S&P 500 rallied nearly 3.5% in just three weeks, suggesting the retreat resulted from profit taking after a big run.

Equity indices began the day amid pressure from a few influential sectors like health care (-0.9%), technology (-0.8%), and industrials (-0.7%). The three sectors lagged throughout the day while the remaining sectors finished closer to their flat lines.

Health care and technology both suffered from losses among high-beta components. The iShares Nasdaq Biotechnology ETF (IBB 337.92, -1.83) settled lower by 0.5% after being down as much as 1.7% in the early going. Meanwhile, chipmakers pressured the technology sector after Micron (MU 29.67, -1.57) was downgraded to 'Neutral' at Nomura. Shares of MU fell 5.0% while the broader PHLX Semiconductor Index slumped 1.9%.

The relative weakness among high-beta names was not isolated to health care and technology components. In fact, homebuilders also lagged with the iShares Dow Jones US Home Construction ETF (ITB 27.23, -0.43) falling 1.6%. However, the consumer discretionary sector (-0.2%) finished ahead of the market thanks to the relative strength of media names like CBS (CBS 62.80, +1.05) and Time Warner Cable (TWC 156.74, +1.23). Meanwhile, most retail names struggled, but AutoZone (AZO 652.00, +2.47), Best Buy (BBY 39.17, +0.54), and Dick's Sporting Goods (DKS 56.00, +0.58) gained between 0.4% and 1.4% after reporting better than expected results.

Elsewhere among cyclical sectors, energy (+0.2%) displayed relative strength throughout the day while crude oil fought to maintain its early-morning gain. The energy component jumped 1.9% to $50.54/bbl after testing its unchanged level shortly after the cash open.

Also of note, the utilities sector (+0.7%) settled in the lead, narrowing its 2015 decline to 6.0%. The remaining countercyclical groups registered losses, but consumer staples (-0.4%) and telecom services (-0.1%) settled ahead of the broader market.

Treasuries settled near their lows after sliding from their overnight highs. The 10-yr yield rose three basis points to 2.12%.

Tuesday's participation was a bit below average with roughly 727 million shares changing hands at the NYSE floor.

Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while ADP Employment Change for February (Briefing.com consensus 220K) will be reported at 8:15 ET. The ISM Services Index for February (consensus 56.5) will cross the wires at 10:00 ET while the Federal Reserve's March Beige Book will be released at 14:00 ET.

Nasdaq Composite +5.2% YTD

Russell 2000 +2.6% YTD

S&P 500 +2.4% YTD

Dow Jones Industrial Average +2.1% YTD