Day Traders Diary

7/8/21

The major averages took a hit today on concerns about the global economic comeback from Covid-19. The losses came as Japan declared a state of emergency in Tokyo for the upcoming Olympics and as countries deal with a rebound in cases because of Covid variants.

The Dow Jones Industrial Average dropped over 300 points, or 1%. The S&P 500 fell 1% as well or 45 points. The Nasdaq Composite is down 130 points or 0.89%. Both the S&P 500 and Nasdaq Composite closed at records in the prior session because of gains from tech shares.

The Labor Department's latest jobless claims data came in unexpectedly higher at 373,000, signaling a possible slowdown in the labor picture amid the Covid recovery. Economists expected to see 350,000 first-time applicants for unemployment benefits for the week ended July 3, according to Dow Jones.

Losses were led by companies that would benefit from a rapid economic comeback from the virus. Shares of Carnival and Royal Caribbean each dropped more than 1%. American Airlines and Delta Air Lines each fell 1%. Nike and Ford were also lower. Retailers Nordstrom and Home Depot lost nearly 3%.

Chip stocks also fell on concerns about the pace of the global recovery. Micron, NVIDIA, Qualcomm, Intel and Applied Materials were all off by more than 1%. Technology stocks also decline with Microsoft, Apple, Facebook and Google-parent Alphabet all in the red.

Stocks rose off their worst levels as shares of key tech stocks traded off their lows and some, including Amazon, broke into the green.

Investors rotated into the safety of Treasuries further on Thursday, pushing the yield on the 10-year Treasury to 1.25% to the lowest since late February. Despite the recovering economy and fast inflation, the 10-year Treasury yield continues to decline. It was at 1.58% to start July and hit a 2021 high of 1.78% in March. Traders remain confused about the exact reasons for the rollover in yields, with many citing concern that the best of the economic recovery may be behind us.

Bank of America, Wells Fargo, Goldman Sachs and other financial shares declined on Thursday as their profitability outlook dimmed with lower rates. JPMorgan Chase and PNC Financial were also lower.