Day Traders Diary

1/6/21

The Dow Jones Industrial Average and S&P 500 rose to all-time highs on Wednesday even as protesting escalated at the Capital building in DC. The Dow climbed 437 points, or 1.44%. The Dow briefly rose more than 600 points earlier in the session. The S&P 500 advanced 21 points or 0.57%. The tech-heavy Nasdaq Composite traded lower falling 78 points or 0.61%. Earlier in the day, it was down more than 1%.

Stocks traded off their highs, and the CBOE Volatility Index moved higher as protestors stormed the Capitol just after lawmakers began meeting to count the Electoral College votes and declare Joe Biden as the election winner. Still, the Dow remained solidly higher and Treasuries, normally a safety trade, were lower.

The 10-year Treasury note yield topped 1% for the first time since March. As of 3:14 p.m. ET, the benchmark rate traded at 1.037%.

Democrat Raphael Warnock is projected to win the Georgia U.S. Senate special election runoff against incumbent Republican Kelly Loeffler, according to NBC News. In the other Senate runoff election, Democrat Jon Ossoff was leading Republican Sen. David Perdue, but NBC said the race was too close to call.

If both Democrats win, that would make a 50-50 tie in the upper chamber, with Vice President-elect Kamala Harris as the tiebreaker vote to give the party control of the Senate. This outcome could facilitate the passing of new coronavirus relief, raising hope for the country's economic recovery.

Goldman Sachs expects another big stimulus package to the tune of $600 billion in the near term if Democrats prevail and take the Senate. Certain stocks gained on expectations for additional government aid.

Tech stocks, the best-performing market group over the past year, lagged on Wednesday amid concerns over higher tax rates. The prospects of new stimulus also made tech stocks less attractive relative to beaten-down cyclical names. Facebook and Amazon both fell at least 2%, and Netflix dipped 2.5%.

Despite the scene at Capitol Hill, gold prices fell $1909.00/ozt or down 2.4%. Tere was no inclination to buy the dip in Treasuries, which were selling off on expectations for further economic stimulus. The 10-yr yield rose nine basis points to 1.04%, while the 2-yr yield increased two basis points to 0.14%. The U.S. Dollar Index was little changed at 89.40