Day Traders Diary

2/11/21

The major averages closed near the unchanged level as some of the air is coming out of the momentum stocks. The Dow Jones Industrial Average dipped just 6 points. The S&P 500 rose 6 points while the Nasdaq rose 53 points or 0.38%. Energy was the worst-performing sector, sliding more than 1%.

After a strong runup in equities in the beginning of February, the market rally seemed to unwind. The Dow advanced slightly Wednesday to eke out a record high, bringing its monthly gains to nearly 5%. The S&P 500 and the Nasdaq closed lower in the previous session.

Investors also digested a worse-than-expected reading of weekly jobless claims. First-time claims for unemployment insurance totaled 793,000 last week even amid declining Covid-19 cases. Economists polled by Dow Jones expected a total of 760,000.

The market rallied to record levels this month as investors anticipated that any additional fiscal relief measures would support equities further. The S&P 500 has gained 4.2% this year so far, while the Russell 2000 jumped more than 15% year to date as beaten-down small caps rotated into favor with rising reopening optimism.

The federal budget deficit is projected to total $2.3 trillion in the 2021 fiscal year, a decline from last year but still well above anything the U.S. had seen prior to the Covid crisis, the Congressional Budget Office reported Thursday. The total also does not include the $1.9 trillion in relief spending that President Joe Biden has proposed.

Federal Reserve Chairman Jerome Powell said Wednesday that the economy faces challenges in the labor market, and so monetary policy needs to stay "patiently accommodative." In remarks at the Economic Club of New York, Powell said the employment picture is a "long way" from where it needs to be.

U.S. Treasuries finished on a lower note, pushing most yields higher. The 2-yr yield increased one basis point to 0.11%, and the 10-yr yield increased three basis points to 1.16%. The U.S. Dollar Index was little changed at 90.40. WTI crude futures decreased 0.8%, or $0.48, to $58.23/bbl.

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