Day Traders Diary

5/13/21

The major averages are rebounding from steep losses in the previous session investors picked up shares after the pullback.The Dow Jones Industrial Average rose 500 points, while the S&P 500 jumped 1.4% as all 11 sectors traded in the green. The tech-heavy Nasdaq Composite popped as much as 1.7% but last traded up only 0.8% as investors tried to pick some winners in the beaten-up tech sector. Apple and Microsoft bounced more than 2%, while Tesla lost ground, falling 2.8%.

Classic reopening trades including airlines jumped after the Centers for Disease Control and Prevention said fully vaccinated people no longer need to wear a face mask or stay six feet away from others in most setting. American Airlines, United and Delta advanced about 1% each.

The stock market took a big hit on Wednesday, led to the downside by technology shares as key inflation data showed higher-than-expected price pressures.

The Dow tumbled 680 points on Wednesday to notch its single-worst session since January. The S&P 500 lost 2.1%, its biggest one-day drop since February, while the tech-heavy Nasdaq Composite slid 2.6%.

Traders across the board cited a rise in interest rates, triggered by a hotter-than-expected inflation report, for the midweek slump.

The Labor Department reported that the prices American consumers pay for goods and services accelerated at their fastest pace since 2008 last month with the Consumer Price Index spiking 4.2% from a year ago.

Investors largely shook off another hot inflation report on Thursday, with producer prices in April jumping more than 6% from a year ago.

Investors have been quick to dump growth stocks amid creeping inflation concerns since rising prices tend to squeeze margins and erode corporate profits. If price pressures run too hot for a sustained period of time, the Federal Reserve would be forced to taper accommodative monetary policy.

Tech, a top-performing sector in 2020 amid the height of the Covid-19 pandemic, has come under pronounced pressure in recent weeks.

The S&P 500 and the Dow are still down more than 2% each this week. The Nasdaq Composite is the worst performer among the major averages, off by 4% this week.

Bitcoin dropped 9% after Elon Musk tweeted that Tesla would halt car purchases using the digital token for environmental concerns, a surprising reversal for the crypto-supporter. Coinbase, which just went public on the promise of crypto-trading becoming mainstream, dropped 2% following Musk's comments.

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