Day Traders Diary

2/3/21

The major averages closed mixed digesting a wave of corporate earnings. The Dow Jones rose 36 points or 0.12%. The S&P 500 inched up 3 points, rising for a third straight day.  as investors digested a wave of corporate earnings. The tech-heavy Nasdaq Composite dipped less than 0.1% or 2 points to 13,610 amid a drop in Amazon shares.

Shares of Google's parent Alphabet jumped 7.3% after the technology giant reported 23% revenue growth and topped estimates for earnings, boosted by Google's recovering advertising business.

Amazon reported earnings that nearly doubled Wall Street estimates, while delivering its biggest revenue of all time at $125.56 billion, pushing it past the symbolic $100 billion mark for the first time. The ecommerce leader also announced that Jeff Bezos is stepping down as CEO. Amazon's stock fell 2%.

Amgen fell 1.4% after the biotech firm issued a weaker-than-expected full year outlook, noting that the pandemic would continue to hurt sales. Amgen was the biggest loser in the blue-chip Dow.

Investors cheered a rebound in U.S. employment last month. A report Wednesday from payroll processing firm ADP showed private firms added 174,000 jobs in January, above the 50,000 Dow Jones estimate.

Wall Street was coming off a strong back-to-back rally as the Reddit-fueled retail trading frenzy dissipated, restoring investor confidence on the broader market. The 30-stock Dow has gained 2.5% this week after posting its best day since November on Tuesday. The S&P 500 has climbed more than 3% this week, while the Nasdaq has jumped more than 4%.

After a meteoric, albeit seemingly synthetic rise in GameStop last week caused by a short squeeze, shares have cratered more than 70% this week. Other Reddit trades have also come back down to Earth amid trading restrictions from major brokers. GameStop swung between gains and losses in volatile trading on Wednesday and ended the session up 2.7%.

Investors are also monitoring negotiations in Washington surrounding another stimulus package. President Joe Biden met with 10 Republican senators on Monday to discuss an alternative, smaller aid proposal to his $1.9 trillion package.

The better-than-expected economic data continued to suggest the economy is heading in the right direction, which contributed to continued selling interest in longer-dated Treasuries. The 10-yr yield increased three basis points to 1.13%, and the 2-yr yield was flat at 0.11%. The U.S. Dollar Index decreased 0.1% to 91.13. The CBOE Volatility Index dropped 10.4% to 22.91 amid decreased hedging interest.

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