Day Traders Diary

3/10/15

The stock market endured a daylong selloff on Tuesday with the S&P 500 (-1.7%) sliding below its 50-day moving average. The benchmark index surrendered its Q1 gain and is now down 0.7% since the end of 2014 while the Dow (-1.9%) underperformed.

Equities stumbled out of the gate after the Dollar Index (98.60, +1.01) continued its charge, climbing to a fresh 12-year high during overnight action. The index spent the morning near its overnight high and built on that gain into the afternoon. The greenback strength sent the euro into the 1.0700 area while the Dollar Index extended its March gain to 3.4%.

The continued greenback strength fueled concerns about the earnings prospects of multinational companies while also putting pressure on overseas entities that conduct their dealings in dollars. As a result, a wave of recent downward earnings revisions has lowered 2015 EPS growth expectations to just 1.1% from 9.8% on December 1, according to S&P Capital IQ.

The diminished prospects for solid earnings growth broadsided the six growth-sensitive sectors while countercyclical groups did not fare much better. Sellers remained in control throughout the day with the two largest sectors by weight—technology (-2.2%) and financials (-2.1%)—pacing the retreat.

Large cap tech names like Apple (AAPL 124.56, -2.58), Google (GOOGL 559.85, -14.25), and Facebook (FB 77.57, -1.87) lost between 2.0% and 2.5% while Qualcomm (QCOM 71.88, -0.82) outperformed, falling 1.1%, after announcing a $15 billion repurchase program and increasing its quarterly cash dividend to $0.48/share from $0.42/share.

Elsewhere among cyclical sectors, the consumer discretionary space ended in-line with the broader market, but that masked an 11.5% surge in the shares of Urban Outfitters (URBN 44.06, +4.55) after the apparel retailer beat bottom-line estimates and reported revenue in-line with its warning from February 9.

Also of note, the energy sector (-1.4%) represented the lone outperformer on the cyclical side even though crude oil fell 3.1% to $48.40/bbl.

On the countercyclical side, the utilities sector (-0.2%) settled just below its flat line after failing to hold its intraday gain. Still, the group ended atop today's leaderboard, benefitting from bond strength that pressured the 10-yr yield to 2.13% (-6 bps).

Today's participation was ahead of recent averages with more than 830 million shares changing hands at the NYSE floor.

Economic data was limited to Wholesale Inventories and JOLTS:

Wholesale inventories increased 0.3% in January after a downward revision revealed no change (from +0.1%) in December 

The Briefing.com consensus expected a decline of 0.1%

Surprisingly, the sharp drop in petroleum prices did not lead to a large decline in petroleum inventories. These inventories only declined 1.1% in January after declining 7.2% in December. Altogether, nondurable goods inventories declined a modest 0.1% in January.

The January Job Openings and Labor Turnover Survey showed that job openings increased to 4.998 million from 4.877 million

Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while the Treasury Budget for February (Briefing.com consensus -$192 billion) will cross the wires at 14:00 ET.

Nasdaq Composite +2.6% YTD

Russell 2000 +0.4% YTD

S&P 500 -0.7% YTD

Dow Jones Industrial Average -0.9% YTD