Daily Market Recap

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The S&P 500 and Dow both had strong intraday reversals and closed higher after suffering early morning losses. The major averages moved below their respective 50 day moving averages in morning trading and moved sharply higher. The Dow was higher by 0.53% and the S&P 500 was up 0.83%. The move from low-to-high today was roughly 1.5%. At the lows today the S&P 500 was 5% off its recent high.

Telecom stocks rallied today after losing ground last week on concerns that the Fed would begin tapering off on QE. Homebuilders rose after Hovnanian released better than expected earnings. Airlines, media, and consumer staples lagged the tape today.

Commodities were mostly higher with precious metals and crude in the lead. Natural gas injections numbers led to a sharp decline of 3.6%. Crude was a leader trading higher by just under 1%.

There was a sharp advance of close to 1.4% in the financial sector, mostly coming in the final two hours of trading with banks and brokers seeing heavy buying.

Telecom equipment names were leaders in the tech sector today. ‘90’s superstar Ciena rose by better than 17%. Ciena beat earnings estimates and increased earnings guidance for the remainder of the year. Other telecom related names, JDSU, Cisco, Finisar, moved up in sympathy with Ciena. Much of the rest of technology had a muted day relative to the volatility in the rest of the market.

Aerospace and defense names snapped back from profit taking over the past several sessions. Boeing released monthly production numbers today. Earnings outlooks for many of the names in the sector remain strong. Multi-line industrials were in line with the tape. Capital equipment names were laggards on the day.

Truckers and rails led the rally in the transport space. The rails had come under significant pressure over the last week or so after leading the sector. Buyers came in today and bought shares after the recent decline. Airlines lagged the overall transport space.

Energy finished just behind the tape on a day when the underlying commodity rose by roughly 1%. Oil related names outperformed the sector. Companies with more exposure to natural gas were lower on the day. Solar stocks were lower on headlines that Spain may cut their renewable energy subsidies by 10%-20%.

Higher-yielding names in the telecom space were in favor today after last week’s selloff. High yielding names sold off last week on fears that the Fed would begin tapering off QE. High yielding blue chip telecom stocks and tower stocks rose dramatically today.

Consumer discretionary stocks outperformed staples. Restaurant stocks were leaders as Yum Brands was higher by 4.5% on strength in China sales. Soda Stream continues to move higher on rumors that Coca-Cola or Pepsi would buy the company.

Source: PFS Group

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