Day Traders Diary

3/23/15

The stock market began the trading week on a sleepy note. The Dow Jones Industrial Average (-0.1%) and S&P 500 (-0.2%) surrendered their slim gains during the final hour while the Nasdaq Composite settled lower by 0.3% after lagging throughout the session.

Equity indices spent the entire Monday session near their flat lines while the Dollar Index (96.86, -1.05) extended its retreat that began late last week. The index fell 1.1% with the greenback giving up 1.4% to the euro (1.0966). The single currency rallied in the morning and saw little afternoon reaction to a joint press conference held by German Chancellor Angela Merkel and Greek Prime Minister Alexis Tsipras. The two leaders did not provide any specifics about their earlier meeting, suggesting the two sides remain at odds with regard to finding a sustainable solution for Greece.

Today's dollar pullback was a supportive factor for crude oil as the energy component climbed off its overnight low ($45.35/bbl) to end higher by 1.8% at $47.44/bbl. WTI crude spent the bulk of the day near its flat line, but spiked ahead of the pit close without any headlines to account for the move.

Interestingly, the energy sector (-0.2%) began among the leaders, but retreated steadily throughout the session. As for other cyclical groups, technology (+0.1%) and consumer discretionary (-0.1%) outperformed while financials (-0.4%) and industrials (-0.8%) struggled.

The industrial sector was pressured by transport stocks after Kansas City Southern (KSU 106.48, -9.21) lowered its guidance. The company cited slower year-to-date carload growth, devaluation of the Mexican peso against the dollar, and lower fuel surcharge revenue as reasons for the reduced outlook. Shares of KSU plunged 8.0% while the broader Dow Jones Transportation Average lost 2.0%.

On the flip side, the technology sector was underpinned by its top component—Apple (AAPL 127.21, +1.31)—and a spate of other large cap names while high-beta chipmakers lagged. NVIDIA (NVDA 22.71, -0.76) was a notable laggard, falling 3.2%, after Goldman Sachs downgraded the stock to 'Sell.' For its part, the PHLX Semiconductor Index lost 1.0%.

Furthermore, the relative weakness among chipmakers contributed to the underperformance of the Nasdaq Composite. The tech-heavy index had to contend with broad-based losses in the biotech space after Vertex Pharmaceuticals (VRTX 125.79, -5.21) reported below-consensus results from one of its trials while Gilead Sciences (GILD 100.26, -2.03) was clipped after Bloomberg reported that some patients who had been taking Gilead's hepatitis C drugs in combination with certain heart drugs have developed complications. Vertex and Gilead lost 4.0% and 2.0%, respectively while iShares Nasdaq Biotechnology ETF (IBB 358.28, -8.24) settled lower by 2.3%.

Biotechnology also weighed on the health care sector, keeping the group in-line with the market. The remaining countercyclical sectors displayed relative strength with utilities (+0.1%), telecom services (+0.1%), and consumer staples (+0.3%) ending ahead of the broader market.

Treasuries settled on their highs with the 10-yr yield down three basis points at 1.91%.

Today's participation was below average with roughly 716 million shares changing hands at the NYSE floor.

Economic data was limited to existing home sales for February, which increased 1.2% from January to an annualized rate of 4.88 million units (Briefing.com consensus 4.90 million).

Supply problems continue exerting downward pressure on home sales. Inventories remained at a 4.6 months' supply at the current sales rate for the second consecutive month. During normal periods of market activity, inventories are generally maintained at 6.0 months' supply.

Tomorrow, February CPI (Briefing.com consensus 0.2%) and core CPI (consensus 0.1%) will be released at 8:30 ET while the FHFA Housing Price Index will cross at 9:00 ET. The day's data will be topped off with the 10:00 ET release of the New Home Sales report for February (consensus 465K).

Nasdaq Composite +5.8% YTD

Russell 2000 +5.1% YTD

S&P 500 +2.2% YTD

Dow Jones Industrial Average +1.6% YTD