Daily Market Recap

The S&P 500 rose 0.41% and the Dow was up 0.04% (IBM dragged the Dow lower) and the NASDAQ was up 0.10%. Homebuilders, materials, financials and telecom stock were the leaders today. Healthcare and tech sold off.

Several headlines surfaced about the situation in Spain and Greece. Those headlines did not announce anything concrete and seemed to have less impact on trading here than they have had in recent weeks.

Several numbers from China will be released tonight. September data showed improvement. Q3 GDP, industrial production, exports, retail sales and several other numbers will be released overnight and will impact our trading tomorrow.

Financials traded higher today. Earnings releases in the sector have largely been in excess of expectations. Better than expected guidance and continued improvement in housing data could lead to multiple expansion and continued strong performance from financials.

The industrial sector outperformed the broader market. Early cycle names like MMM outperformed late cycle names, which suffered some earnings disappointments. Machinery and capital equipment stocks traded higher on the better than expected housing starts numbers.

Homebuilders and building stocks were the star performers of the day. September housing starts were 872,000 versus an estimate of 815,000 and September building permits were 894,000 against an estimate of 815,000. Many homebuilders and materials stocks broke out to fresh 52-week highs.

The materials sector continued to outperform the market. Steel stocks were a leader today. Rio Tinto released strong iron ore production numbers. The release had a positive impact on all steel stocks across the board. Gold and silver stocks traded up roughly 1%.

Energy outpaced the market today. The sector was up 1.25% on strength in integrated oil names as well as service stocks and drillers. BP traded higher on its announcement they were in talks to sell their stake in a joint venture to Resneft. Coal stocks traded between 4-5% higher on the news regarding iron ore production and an improved sentiment regarding prospects in China.

Abbott Labs’ earnings report and guidance were not taken favorably and the stock sold off by more than 4%. Money rotated to the largest pharma companies in response as Pfizer, Merck and especially Johnson & Johnson traded higher. JNJ reported earnings yesterday and has traded aggressively higher since the report.

IBM closed off 4.91%, well off its lows. They reported earnings that topped estimates by $0.01 but revenues declined by better than 5% against the third quarter of 2011. Intel beat earnings estimates significantly but traded to new lows on muted guidance. The tech sector continues to underperform.

Source: PFS Group

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