Day Traders Diary

4/28/15

The stock market ended the Tuesday session on a mixed note with the Dow (+0.4%) and S&P 500 (+0.3%) registering modest gains while the Nasdaq (-0.1%) settled in the red.

Equity indices spent the bulk of the trading day near their flat lines, save for a morning retreat, which was retraced in short order. The brief pullback occurred after a disappointing Consumer Confidence report and unfolded amid reports from Al Arabiya indicating that a U.S. cargo vessel was seized by Iran. The U.S. Navy promptly refuted the report with subsequent stories revealing that the cargo ship came from the Marshall Islands, which are under U.S. protectorate. Furthermore, the ship was released a couple hours after the initial stoppage.

Although the major averages returned to their flat lines in short order, extending the rebound proved challenging even though nine sectors finished in the green.

The top-weighted technology sector (+0.2%) was limited to a modest gain with its largest component—Apple (AAPL 130.56, -2.09)—falling 1.6% despite beating earnings and revenue estimates; however, the stock entered the session with a 6.3% gain since April 17, suggesting a strong report was already priced in.

Apple's pullback prevented the Nasdaq Composite from ending in the green while biotechnology also contributed to the underperformance of the index. The iShares Nasdaq Biotechnology ETF (IBB 344.50, -4.05) slipped below its 50-day moving average, losing 1.2% to extend this week's decline to 5.3%. However, the health care sector (+0.4%) ended in the green thanks to better than expected earnings from Merck (MRK 59.98, +2.88). Similarly, Pfizer (PFE 34.48, -0.11) reported above-consensus results, but cautious guidance overshadowed its earnings beat.

Staying on the earnings theme, Twitter (TWTR 42.27, -9.39) was scheduled to report after the close, but the company jumped the gun and released its results during the final hour of the session. The company beat bottom-line estimates, but its revenue and revenue guidance missed expectations. The stock was halted for a brief time, but widened its loss upon resumption, settling lower by 18.2%. 

Elsewhere, the consumer discretionary sector (-0.3%) was the only group that couldn't climb out of the red. Many apparel retailers registered losses with Coach (COH 39.65, -2.68) falling 6.3% after disappointing revenue and light same store sales overshadowed a one-cent beat. On the flip side, homebuilders held up well following better than expected earnings from M/I Homes (MHO 23.78, +0.67). Shares of MHO gained 2.9% while iShares Dow Jones US Home Construction ETF (ITB 26.80, +0.14) advanced 0.5%.

Homebuilder stocks were able to advance even though Treasuries spent the day in a steady retreat, sending the 10-yr yield higher by six basis points to 1.99%.

Today's participation was in-line with recent totals as more than 760 million shares changed hands at the NYSE floor.

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

The Case-Shiller 20-city Home Price Index for February rose 5.0% against a 4.7% increase expected by the Briefing.com consensus

The Conference Board's Consumer Confidence Index declined to 95.2 in April from an upwardly revised 101.4 (from 101.3) while the Briefing.com consensus expected an increase to 102.2 

The Expectations Index fell to 87.5 in April from 96.0 in March, which was the lowest level since September 2014

The Present Conditions Index dropped to 106.8 in April from 109.5 in March

Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while the advance reading of Q1 GDP will be reported at 8:30 ET (Briefing.com consensus 1.0%). The Pending Home Sales report for March will cross at 10:00 ET (consensus 1.2%) while the latest policy directive from the FOMC will be released at 14:00 ET.

Nasdaq Composite +6.7% YTD

Russell 2000 +4.5% YTD

S&P 500 +2.7% YTD

Dow Jones Industrial Average +1.6% YTD