Day Traders Diary

5/29/15

The stock market began June on a modestly higher note with the S&P 500 adding 0.2%.

Index futures spiked just before 7:00 ET, reacting to chatter that a deal between Greece and its creditors will be announced today. That rumor was struck down within 15 minutes of making the rounds, but equity futures did not retrace that morning spike until the cash market opened for action.

The major averages returned to their flat lines once the cash session began, but persistent relative strength among influential groups like health care (+0.4%), technology (+0.3%), consumer discretionary (+0.3%), and industrials (+0.4%) helped the market climb to a fresh high during the afternoon. However, it is worth noting that the Monday advance occurred amid light volume with just 665 million shares changing hands at the NYSE floor. As for Greece, the country is expected to be presented with a final proposal prepared by leaders from France, Germany, and the EU.

Eight sectors registered gains with industrials (+0.4%) ending atop the leaderboard thanks to a rebound in transport stocks. The Dow Jones Transportation Average rallied 1.1% with airlines pacing the move after the Chief Executive Officer of Southwest Airlines (LUV 37.85, +0.88) said the company plans to limit its seat capacity growth. Shares of LUV gained 2.4% while the Dow Jones Transportation Average narrowed its Q2 decline to 4.0%.

Elsewhere among cyclical sectors, consumer discretionary (+0.3%) and technology (+0.3%) also displayed relative strength with M&A activity underpinning the tech sector. Specifically, Altera (ALTR 51.68, +2.83) spiked 5.8% after agreeing to be acquired by Intel (INTC 33.90, -0.55) for $54/share in an all-cash transaction valued at $16.70 billion.

Overall, four of six cyclical sectors ended in-line with or ahead of the S&P 500 while energy (-0.2%) and materials (unch) struggled to keep pace. The energy sector was pressured in the early going by weakness in crude, but the sector narrowed its loss as the energy component also recovered its intraday decline, settling at $60.24/bbl.

Moving to the countercyclical side, consumer staples (unch) and telecom services (-0.5%) lagged throughout the session while health care (+0.4%) and utilities (+0.2%) registered gains. The health care sector finished among the leaders even as biotechnology spent the day among the laggards. The iShares Nasdaq Biotechnology ETF (IBB 364.81, -0.22) shed 0.1%.

Treasuries spent the day in a steady decline, sending the 10-yr yield higher by five basis points to 2.18%.

Economic data included Personal Income/Spending data, Core PCE Prices, Construction Spending, and the ISM Index:

Personal income increased 0.4% in April after being flat in March while the Briefing.com Consensus expected an increase of 0.3% 

According to the wage data from the April employment report, aggregate earnings increased roughly 0.3%, which translated into a 0.2% increase in total employee compensation

Personal spending was flat in April after increasing an upwardly revised 0.5% (from 0.4%) in March while the consensus expected an increase of 0.2%

Core PCE prices rose 0.1% while the Briefing.com consensus expected a reading of 0.2%

Construction spending increased 2.2% in April after increasing an upwardly revised 0.5% (from -0.6%) in March while the Briefing.com consensus expected an increase of 0.8% 

That was the largest monthly increase in construction spending since a similar gain in May 2012

The ISM Manufacturing Index increased to 52.8 in May from 51.5 in April while the consensus expected an increase to 51.9 

Despite poor regional manufacturing reports, the national index showed a fairly well rounded acceleration in manufacturing activities

Tomorrow, the Factory Orders report for April (Briefing.com consensus 0.0%) will be released at 10:00 ET.

Nasdaq Composite +7.3% YTD

Russell 2000 +3.8% YTD

S&P 500 +2.6% YTD

Dow Jones Industrial Average +1.2% YTD