Day Traders Diary

2/22/21

The major averages closed mixed with steep losses in technology shares dragging down the S&P 500 and Nasdaq. A continuous rise in bond yields also dented the appetite for growth stocks. The Dow Jones Industrial Average reversed a 200-point loss and closed up 27 points at 31,521. Disney jumped more than 4%, while industrial giant Caterpillar and chemicals company Dow jumped 4.1% and 3.3%. American Express and Chevron also lifted the blue-chip Dow. The broad equity benchmark lost 0.5% in volatile trading, falling for a fifth straight session amid the weakness in tech and consumer discretionary. The Nasdaq Composite fell 2.2% as Tesla shares slid 8%. Big Tech stocks came under pressure with Apple, Amazon, Microsoft all dropping at least 2%.

Some equity investors grew concerned about rapidly rising Treasury yields in recent weeks as they could especially hurt high-growth companies reliant on easy borrowing while diminishing the relative appeal of stocks.

The 10-year Treasury yield rose again on Monday to around 1.35% after jumping 14 basis points last week to its highest level since February 2020. So far this month, the benchmark rate has moved up 27 basis points. The 30-year yield touched a one-year high of 2.2% Monday. A basis point is 0.01%.

Tomorrow the Federal Reserve Chairman Jerome Powell, will deliver his semi-annual testimony on the economy before the Senate Banking Committee on Tuesday. His comments on rates and inflation could determine the market direction for the week.

The market headed into the final week of February with solid gains. The Dow and the S&P 500 have both risen about 5% this month, while the Nasdaq has climbed 4.5%. The small-cap Russell 2000 has outperformed with a 9.6% gain this month.

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