Day Traders Diary

5/27/15

The major averages enjoyed a daylong rally on Wednesday that helped the S&P 500 (+0.9%) narrow its week-to-date decline to just 0.1%. Meanwhile, the Nasdaq Composite (+1.5%) closed at a fresh record high (5,106.59) and turned its weekly decline into a 0.3% advance for the week.

Equity indices began the session with modest gains and enjoyed an early surge amid reports that Greek officials and Eurogroup members have started crafting a staff-level agreement to secure funds for the country. However, those reports were refuted during the next hour with Bloomberg citing a Eurogroup official as saying the two sides have yet to begin working on a joint statement.

Strikingly, the stock market all but ignored the prompt refutation and continued rising into the afternoon with the technology sector (+1.8%) pacing the move.

The top-weighted tech sector enjoyed broad-based support from large cap components like Apple (AAPL 132.04, +2.42), Google (GOOGL 554.25, +7.06), and Microsoft (MSFT 47.61, +1.02) while chipmakers stole the show. To that point, the PHLX Semiconductor Index surged 3.9% after it was reported that Avago (AVGO 141.49, +10.19) is in advanced talks to acquire Broadcom (BRCM 57.13, +10.21). Shares of AVGO jumped 7.8% while Broadcom soared 21.8%.

Similar to technology, eight of the remaining nine sectors posted gains, but only financials (+0.9%) and health care (+1.1%) finished in-line with or ahead of the broader market. The growth-sensitive financial sector enjoyed broad support and extended its May gain to 2.7% while health care was boosted by biotechnology with iShares Nasdaq Biotechnology ETF (IBB 366.96, +6.66) climbing 1.9%.

Elsewhere, the consumer discretionary sector (+0.7%) finished not far behind the broader market after a few of its components reported earnings. Jeweler Tiffany & Co (TIF 94.54, +9.01) surged 10.5% following better than expected results while Michael Kors (KORS 45.93, -14.66) plunged 24.2% after reporting a one-cent miss and guiding Q1 results below analyst expectations. Also of note, homebuilder Toll Brothers (TOL 36.16, -0.83) lost 2.2% after reporting a two-cent beat on light revenue and narrowing its guidance.

On the downside, the energy sector (-0.1%) lagged throughout the session as crude oil struggled, falling 0.8% to $57.57/bbl.

Treasuries slumped to lows in reaction to the early report suggesting a Greek deal is near, but they reclaimed their losses as the session wore on. As a result, the 10-yr yield ended flat at 2.14%.

Today's participation was roughly in-line with last week's totals as 707 million shares changed hands at the NYSE floor.

Economic data was limited to the weekly MBA Mortgage Index, which fell 1.6% to follow last week's 1.5% decline.

Tomorrow, weekly Initial Claims (Briefing.com consensus 274K) will be released at 8:30 ET while April Pending Home Sales (consensus 1.0%) will be reported at 10:00 ET.

Nasdaq Composite +7.8% YTD

Russell 2000 +4.1% YTD

S&P 500 +3.1% YTD

Dow Jones Industrial Average +1.9% YTD