Day Traders Diary

6/30/21

The major averages closed mixed with the S&P 500 rising once again to a record high on the final day of June to close out a strong first half of the year for Wall Street. The Dow Jones Industrial Average rose 210 points, boosted by strong days for Walmart and Boeing. The S&P 500 perked up 5 points or 0.13% for its fifth-straight record close. The Nasdaq Composite lagged, ticking down 24 points or 0.17%.

Wednesday is the last day of the second quarter and final day of the first half of 2021. Entering the session, the S&P 500 was up 14% year to date, while the Nasdaq Composite and the Dow have gained 12% apiece. For the quarter, the S&P 500 is up 8%. The S&P 500 and Nasdaq all posted fresh record closes on Tuesday.

The S&P 500 is headed for its fifth positive month in a row, rising 2.1% to 4,291.80 in June. The broad index is also on track for its best first half since 2019.

Investors have shrugged off high inflation readings and have kept buying stocks on the hopes an economic comeback from the pandemic would continue and the Federal Reserve would mostly maintain its easy policies. The three biggest winners in the Dow this year so far are Goldman Sachs, American Express and Walgreens Boots Alliance, all up more than 30%. Chevron, Microsoft and JPMorgan Chase are up more than 20% each. The tech and health care sectors of the S&P 500 both closed at records Tuesday.

The gains came as nearly 60% of U.S. adults have received a COVID-19 vaccine, allowing the economy to open back up at a rapid pace. Still, new variants of the virus have raised some concerns that more restrictions such as mask wearing would have to be reinstituted because the pace of vaccinations has slowed.

Some investors and strategists have cited the spread of the Delta variant of Covid-19 as a risk for markets in the second half of the year. However, JPMorgan's Marko Kolanovic said in a note to clients on Wednesday that the variant shouldn't hurt equity markets, citing low fatality rates in countries with widespread vaccinations.

Good first halves for the market usually bode well for the rest of the year. Whenever there has been a double-digit gain in the first half, the Dow and S&P 500 have never ended that year with an annual decline, according to Refinitiv data going back to 1950.

One group that has helped the broad market reach its latest round of record highs is semiconductors, with the VanEck Semiconductor Index rising 6% since June 18 and more than 3% in the first two days of this week.

A busy day for initial public offerings on Wednesday was headlined by ridesharing company Didi, which popped in its opening minutes before retreating toward its IPO price later in the session.

Pending home sales jumped in May to their highest level since 2005. However, mortgage demand fell last week, the Mortgage Bankers Association said Wednesday, with high prices and low supply appearing to squeeze out some potential buyers. The readings came after a jump in home prices, reflected in the S&P CoreLogic Case-Shiller index, spurred homebuilder stocks higher on Tuesday.

Elsewhere, the Instituted for Supply Management's Chicago purchasing managers index came in lower than expected for June but still showed expansion.

During the regular session Tuesday, stocks were little changed in light trading although the S&P 500 did notch its 4th straight positive session and an all-time high.

Stocks likely won't see big movement until Friday's jobs report gives a better idea of the state of the economy. Economists expect 683,000 jobs were added in June, according to a Dow Jones survey.

On Wednesday, payroll firm ADP reported that private payrolls rose 692,000 in June, beating expectations. However, the firm's May number was revised down.