Day Traders Diary

7/21/15

The stock market retreated on Tuesday with the Nasdaq Composite (-0.2%) backing away from yesterday's record close. However, the tech-heavy index held up relatively well considering the Dow (-1.0%) and S&P 500 (-0.4%) registered wider losses.

The price-weighted Dow Jones Industrial Average paced the retreat with IBM (IBM 163.07, -10.15) and United Technologies (UTX 102.67, -7.81) largely responsible for the underperformance. The second largest index member—IBM—lost 5.9% following its bottom-line beat that was aided by a lower tax rate while the company's year-over-year revenue showed the 13th consecutive quarterly decline.

Separately, United Technologies fell 7.1% after below-consensus revenue and lowered earnings guidance for the year overshadowed an earnings beat. In addition to pressuring the Dow, shares of UTX weighed on the industrial sector (-1.1%), which ended behind the remaining cyclical groups. Interestingly, the sector finished among the laggards even though transport stocks displayed relative strength, sending the Dow Jones Transportation Average higher by 0.7%.

Elsewhere among cyclical groups, the energy sector (+0.1%) tried to resist the market-wide pressure, but could only eke out a slim gain while crude oil rose 0.9% to $50.87/bbl. Also of note, the top-weighted technology sector (-0.5%) settled just behind the broader market.

Just like the energy sector, high-beta chipmakers surrendered the bulk of their gains during afternoon action with the PHLX Semiconductor Index narrowing its advance to 0.1%. As for large cap tech components, Apple (AAPL 130.71, -1.36) lost 1.0% ahead of its earnings report. Investors will be most interested in iPhone sales and the pace of sales growth, but the report should also provide an early look at Apple Watch sales. Apple is the top-weighted stock in the market-cap weighted S&P 500 (3.98%), the top-weighted stock in the market-cap weighted Nasdaq 100 (13.9%), and the fifth highest-priced stock in the price-weighted Dow Jones Industrial Average.

Over on the countercyclical side, health care (-0.4%) and consumer staples (-0.3%) settled near the broader market while telecom services (-1.7%) and utilities (-1.0%) underperformed throughout the session. The telecom sector ended at the bottom of the leaderboard as Verizon (VZ 46.97, -1.13) tumbled 2.4% despite reporting a bottom-line beat.

Treasuries made a brief appearance in the red this morning, but they rallied as stocks declined with the 10-yr yield falling three basis points to 2.34%.

Investors did not receive any economic data today, but tomorrow will include the release of the weekly MBA Mortgage Index at 7:00 ET, followed by the FHFA Housing Price Index for May, which will be reported at 9:00 ET. The day's data will be topped off with the Existing Home Sales report for June, which will cross at 10:00 ET (Briefing.com consensus 5.40 million).

Nasdaq Composite +10.0% YTD

Russell 2000 +4.2% YTD

S&P 500 +2.9% YTD

Dow Jones Industrial Average +0.5% YTD