Day Traders Diary

4/12/21

The major averages finished in the red slightly below record levels as muted trading resumed before the first-quarter earnings season and the release of widely-watched inflation data. The Dow Jones Industrial Average slipped 55 points. Boeing was the biggest decliner in the blue-chip Dow, falling 2%. The S&P 500 dipped 81 cents or 0.1%, while the Nasdaq Composite fell 50 points or 0.36%.

Wall Street has been relatively quiet with the S&P 500 moving within 1% for five sessions in a row. Market volatility has declined to pre-pandemic levels amid rising reopening optimism. The Cboe Volatility Index, AKA the VIX or the market's fear gauge, has traded below 18 for the past four days, a level unseen since February 2020.

Reopening plays led Monday's slight losses with shares of Carnival and Norwegian Cruise Line off more than 4% each. United Airlines fell about 5% after the carrier said its first-quarter revenue is expected to fall 66% compared with the same period in 2019. The new guidance fell near the top of the range between 65% and 70% that the company had previously forecast.

Shares of Nuance Communications jumped 18% after Microsoft announced it will buy the speech recognition company in a $16 billion deal. The Nuance acquisition represents Microsoft's largest acquisition since it bought LinkedIn for more than $26 billion in 2016.

Nvidia jumped 6% after the chip giant said it first quarter revenue for fiscal 2022 is tracking above its previously provided outlook and that it expects demand to continue to exceed supply for much of this year.

The first-quarter earnings reporting season begins this week, with expectations set for broadly positive news and an uptrend for U.S. equities thanks to a recovering economy. Many of the nation's largest banks, including Goldman Sachs and JPMorgan Chase will this week report results for the three months ended March 31.

This week is also packed with Federal Reserve speeches and key economic data including a hotly anticipated inflation reading Tuesday, when the U.S. consumer price index is released. Economists polled by Dow Jones anticipate a 0.5% gain in CPI month over month and a 2.5% increase from last year's level.

Tesla gained more than 3% to around $700 Monday after Canaccord Genuity upgraded the stock to buy and raised its price target to $1,071, citing its battery innovations.

Fed Chairman Jerome Powell on Sunday reiterated that the Fed wants to see inflation rise above its 2% for an extended period before officials move to raise interest rates.

He added that amid an accelerated Covid-19 vaccine rollout and strong fiscal support, the U.S. economy appears to be at a turning point.

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