Day Traders Diary

4/13/21

The major averages closed mixed after a March inflation report turned out not as bad as some traders feared, but the impact of a halt to the rollout of Johnson & Johnson vaccine kept optimism in check. The S&P 500 added 13 points or 0.45% to reach a new intraday record high while the Nasdaq Composite gained 1.1% as Apple, PayPal and semiconductor maker Nvidia all gained at least 2%. Tesla rose 8.3%. The Dow Jones Industrial Average was the laggard down 68 points after dropping more than 150 points earlier in the session.

Reopening trades came under pressure Tuesday morning after the U.S. Food and Drug Administration said it's recommending a pause in the Johnson & Johnson Covid-19 vaccine after reported cases of blood clotting.

There have been six reported cases of a rare and severe type of blood clot after receiving the J&J vaccine, the FDA said. The administration is calling for a pause in the vaccine until Centers for Disease Control and Prevention concludes its investigation into these cases.

Acting FDA Commissioner Janet Woodcock said later Tuesday that she expects the pause to last "a matter of days." More than 6.8 million doses of the single-dose vaccine have been administered in the U.S. J&J shares lost 1.3%.

Jeff Zients, the White House Covid-19 response coordinator, replied that the FDA's announcement should not have a material impact on the national effort to vaccinate.

Still, shares of companies that would be hurt the most if the vaccine rollout slows underperformed Tuesday.

Alaska Air stock pulled back 1.7% while American Airlines lost 1.5%; car-rental company Avis Budget shed 1%. Shares of Moderna, which makes another coronavirus vaccine, jumped 7.1% following the J&J news, which was reported first by The New York Times.

The consumer price index, one of Wall Street's most-popular inflation gauges, rose 0.6% in March and increased 2.6% from the same period a year ago. Economists polled by Dow Jones were projecting the headline index to rise by 0.5% month over month and 2.5% year over year.

Core CPI, which excludes volatile food and energy costs, increased 0.3% monthly and 1.6% year over year.

Government officials, including Federal Reserve Chair Jerome Powell on Sunday and Biden administration economists on Monday, stressed that while they expect a jump in inflation in the months ahead, the change could prove temporary due to comparisons with last year's pandemic lockdowns and extra consumer spending from stimulus checks and pent-up demand.

Private sector strategists and economists also said that the reading may not be a true gauge of rising prices. Fed officials said they are willing to let inflation run hot for a period of time without changing their accommodative policy stance, including asset purchases and a benchmark interest near zero.

The market has been calm over the past week as Wall Street settled into a lull ahead of the first-quarter earnings season. Corporate news is set to pick up later in the week, with JPMorgan Chase, Goldman Sachs and Delta Air Lines among the companies set to report quarterly results.

The bond market was also subdued on Tuesday, with the 10-year Treasury yield edging lower to just above 1.65%. Yields move inversely to prices.