Day Traders Diary

7/22/21

The major averages closed modestly in the green led by tech shares despite an unexpected jump in jobless claims that resurfaced some concerns about the economy and sent bond yields lower.

The Dow Jones Industrial Average rose 25.35 points, closing at 34,823.35. The S&P 500 climbed 0.2% higher, reaching 4,367.48. The tech-heavy Nasdaq Composite led the markets with a 0.3% gain, ending the day at 14,684.60.

Investors jumped back into their favorite tech stocks as optimism about the sector grows ahead of big earnings reports next week for some of the largest names in the space. Salesforce gained 2.5% while Amazon and Facebook climbed 1.4% higher.

Microsoft rose 1.6% after Citi raised its price target, saying the tech giant has the potential to beat Wall Street expectations when it reports quarterly earnings next week. Citi predicted the stock will rise more than 30% over the next year. Apple rose almost 1% after Canaccord Genuity said there was "strong demand" for Apple products ahead of its earnings next week.

The overall market continues to grind higher, led sometimes by value stocks when economic optimism is high and on days such as Thursday, tech shares take over the lead.

The Dow is up 0.3% on the week and sits less than 1% from a record high, bouncing back from a 700-point-plus rout on Monday.

Some investors believe that reopening plays will once again come back into favor and tech shares will pull back.

Stocks were under pressure earlier in the day after jobless claims unexpectedly rose to 419,000, higher than the 350,000 economists polled by Dow Jones estimated and more than the upwardly revised 368,000 from the previous period.

The 10-year Treasury yield ticked lower to 1.265% on the poor jobs data. The rate dropped to a 5-month low of 1.17% earlier in the week.

Bank stocks, which are typically viewed as cyclical stocks whose performance is tied to the path of the economy, were down with JPMorgan, Bank of America and Wells Fargo shedding more than 1% each.

Still, a strong second-quarter earnings reporting season continues, with American Airlines posting a profit for the period, snapping a streak of five straight quarters with losses, thanks to the recovery in travel demand and government aid. The shares are down 1.1% on Thursday. Similarly, Southwest Airlines reported a quarterly profit, but the carrier's stock closed 3.4% lower.

Union Pacific, traded up more than 1% after reporting second-quarter net income of $1.8 billion or $2.72 per diluted share. That's up from $1.1 billion, or $1.67 per diluted share in the year-ago quarter.

CSX jumped nearly 3.5% after the railroad's second-quarter profit more than doubled. AT&T shares climbed about 0.4% after earnings and revenue topped analyst estimates.

Texas Instruments slid 5.3% after the chipmaker topped expectations for the second quarter, but warned that third-quarter results could fall short of analysts' estimates.