Day Traders Diary

7/6/21

The major averages closed mixed on this holiday-shortened week with concern that maybe the best of the economic recovery from the pandemic is behind us. The Dow Jones Industrial Average fell 204 points or 0.59%, dragged down by losses in Dow Inc., Caterpillar, JPMorgan and Chevron. The S&P 500 dipped just 8 points or 0.2%, snapping a seven-day winning streak while the Nasdaq Composite rose 24 points or 0.17%.

Amazon rose nearly 5% to a record after the Department of Defense cancelled its $10 billion JEDI cloud contract with Microsoft. Instead, the DOD is launching a new contract and soliciting proposals from both Amazon and Microsoft. Plus, Andy Jassy officially took over as CEO of Amazon on Monday. Jeff Bezos is now the executive chairman of the board.

Investors are juggling several signs that the rapid economic growth from the depths of the pandemic could be peaking. The ISM Services index, a major gauge of the services sector, slowed to 60.1 in June from a record in the prior month, data released Tuesday showed. Economists polled by Dow Jones expected a print of 63.5. This follows Friday's jobs report, which showed the unemployment rate rose back up to 5.9% against the 5.6% expectation.

Bond yields also fell on Monday, with the 10-year Treasury yield below 1.4%, further evidence that investors are doubting the strength of the U.S. economy.

Many on Wall Street expect smaller and choppier gains from the rest of the year after a strong performance in the first half amid a historic economic reopening. The S&P 500 is up nearly 16% year to date.

Wall Street's consensus year-end target for the S&P 500 stands at 4,276, representing a near 2% loss from the 500-stock average's current level, according to the CNBC Market Strategist Survey that rounds up 16 top strategists' forecasts.

Citi analysts told clients they are concerned about central bank policy and see potential that earnings reports, which begin in a few weeks, could fall short of expectations. They suggest July could be "an unsettling month," due to "loftier inherent expectations" following such strong first-quarter reports.

U.S. shares of Chinese ride-hailing giant Didi plunged as much as 25% after China said new users could not download the app until it conducts a cybersecurity review. The announcement took markets by surprise given that Didi just made its U.S. debut on the NYSE last week.

West Texas Intermediate crude rose to a six-year high as a key meeting between oil producer group OPEC and its partners on crude output policy has been called off. The postponement came as the United Arab Emirates rejected a proposal to extend oil production increase for a second day. At one point on Tuesday, WTI crude hit as high as $76.98, which was the highest price since November 2014, after pulling back before the opening bell.

Investors await the release of June Federal Open Market Committee meeting minutes due Wednesday for clues about the central bank's behind-the-scenes discussions on winding down its quantitative easing program.