Day Traders Diary

1/13/21

The major averages closed mixed with the Dow Jones Industrial Average falling 8 points or 0.03%. The S&P 500 rose 8 points while the Nasdaq Composite closed up 56 points or 0.43%. The decline was led by tech shares, as traders kept an eye on interest rates and the political uncertainty coming out of Washington.

Intel jumped nearly 7% on news that CEO Bob Swan would step down, effective Feb. 15. Other tech-related names also caught a bid, with Netflix and Amazon popping 2.7% and 1.4%, respectively. Apple also closed higher by more than 1%.

Wednesday's moves came as U.S. Treasury rates eased from their March highs. The benchmark 10-year note yield fell more than 5 basis points to 1.092%. The 30-year bond yield also fell on Wednesday to 1.823%. On Tuesday, the benchmark rate traded as high as 1.187%.

Despite this decline, the 10-year rate remains more than 15 basis points above its 2020 close of 0.92%.

Given the rise in rates this year, Credit Suisse recommended that investors favor pro-cyclical sectors, including financials and energy. Rising rates could hurt growth stocks, however, which have been the market stalwarts during the pandemic.

Expectations for additional fiscal stimulus is one of the reasons behind the steady move higher in yields. President-elect Joe Biden is expected to release details on his economic plan on Thursday.

Wall Street was coming off a muted session as the major averages paused on their recent run to record highs.

Meanwhile, turmoil in Washington continues. Vice President Mike Pence said Tuesday night he will not remove President Donald Trump from office. That came before the Democratic-held House approved a resolution urging Pence and the Cabinet to push Trump out of the White House after he incited last week's riot on the Capitol.

The House of Representatives plans to vote on Wednesday to impeach Trump for a second time. Later in the day, Trump called on all Americans to help ease political tensions.

Covid cases also continue to increase in the U.S. and abroad. The U.S. is recording at least 247,600 new Covid-19 cases and at least 3,340 virus-related deaths each day, based on a seven-day average calculated by CNBC using Johns Hopkins University data.

Treasuries rebounded after six days of losses in longer tenors, sending the 10-yr yield down five basis points to 1.09%. The U.S. Dollar Index rose 0.3% to 90.36.