Day Traders Diary

7/19/21

The major averages took a hit to start the week on concerns a rebound in Covid cases would slow global economic growth. The selling picked up as the session went on and the Dow Jones Industrial Average dropped the most since last October. The Dow dropped 725.81 points, or 2.1%, to 33,962.04 in a broad-based rout that sent all 30 members lower. At one point during the session, the Dow was down 946 points before recovering some ground into the close. The S&P 500 fell 1.6% to 4,258.49 with energy, financial and industrial sectors as the worst performers. The tech-dominated Nasdaq Composite fell 1.1% to 14,274.98, its fifth-straight day of losses and worst losing streak since October.

The 10-year Treasury yield fell to a new five-month low of 1.17%, exacerbating fears about the slowing economy. Crude oil dropped 7%. The small-cap Russell 2000 dropped 1.5%, recovering after it briefly dropped into correction territory on an intraday basis - down more than 10% from its March high.

The Cboe Volatility Index surged as high as 25 amid the broad market sell-off, the highest level since May. The so-called fear gauge looks at prices of options on the S&P 500 to track the level of fear on Wall Street.

Airlines got hit as investors reassessed whether travel among consumers would live up to high expectations, with shares of Delta and American sinking about 4%. United lost 5%.

Key stocks linked to global economic growth also fell. Boeing shed 5%, and General Motors and Caterpillar dropped about 2%.

Wilson is advising clients to buy staples such as Mondelez International to weather the decline.

Oil prices fell on fears of slowing growth and as OPEC+ agreed to begin phasing out production cuts. Energy stocks were among the worst performers, with with ConocoPhillips off by more than 3%. Exxon Mobil also lost 3%. WTI crude shed 7.8% to $66.26 a barrel. The Energy Select Sector SPDR lost 4% for the worst performance among the 11 sectors.

The Financial Select Sector SPDR was the second-worst performer, down 2.8% as falling yields crimped the profitability outlook for banks. JPMorgan dropped 3.2% and Bank of America fell 2.6%.

Market breadth was extremely poor with advancers beating decliners on the NYSE by nearly five-to-one. Big Tech shares were not immune to the sell-off with Apple and Alphabet each down about 2%.