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Daily Market Recap

Thu, Oct 10, 2013 - 3:11pm

The S&P 500 spiked higher by 2.18% and the Dow matched that percentage gain as it gained 323 points. With all the daily volatility, the S&P 500 is back to flat this week, just like it was last week. The catalyst this morning was a proposal from John Boehner that called for a six week debt ceiling lift proposal. Details on that remain to be seen.

The market took today’s activity to mean that neither part was going to use the debt ceiling as a negotiating tool and they will raise the ceiling in small increments if necessary. There was a rush to cover short positions as investors went home decidedly negative yesterday.

The high beta/best performing stocks of the year came under severe pressure the past few days. There was talk of the risk on trade being dead at the end of trading yesterday. Things reversed, aggressively, today. The defensive sectors that led earlier in the week were the laggards today. Utilities, energy and telecom stocks lagged the broad market averages in today’s trading. Internet stocks returned to favor. Social media names saw heavy buying after profit taking took place recently. Social/mobile stocks like Facebook and Groupon and consumer centric names like Priceline and Amazon were leaders.

European stocks were actually up more aggressively today than our markets. European stocks surged over 2.3% today and are higher by 1% for the week. The rancor coming from Washington has made investors look more favorably at opportunities in Europe.

Commodities were mostly lower with precious metals, copper, crude, and natural gas all underperforming the market. The near term resolution in Washington led to a stampede away from metals.

There was a huge rally in the financial sector. The sector was up in the weak market yesterday and saw heavy buying all day today. The sector gained 2.7% today. Just as in the broad market, European banks outperformed their US peers.

While technology posted a strong 1.7% gain, the sector lagged the broad market. Semiconductors led the group gaining 2.0%.

Industrials roared higher at the open and gained strength throughout the day as investors increased exposure to the sector on increased optimism that there may be a deal reached in DC ahead of the October 17th deadline. Aerospace was an area of strength in the sector on the favorable news form DC.

Consumer discretionary outperformed the market and staples slightly underperformed. Consumer electronics and office supply stores were leaders. Nike outperformed as investors’ confidence in the name increased after they held their investor conference last night. Starbucks was another leader in the space.

Source: PFS Group

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