Day Traders Diary

7/26/21

The major averages rallied to new high led by tech stocks. The Dow Jones Industrial Average rose 83 points or 0.24%. The S&P 500 rose 10 points or 0.24%, reaching an all-time high. The tech-heavy Nasdaq Composite traded up just 3 points.

One of the busiest weeks of earnings reports is on deck, with Tesla kicking it off after the closing bell. Last week, CEO Elon Musk said the automaker would likely start accepting bitcoin for vehicle purchases again. Shares of the electric vehicle maker rose 2.4%.

Big tech giants Apple, Alphabet and Microsoft are all set to report on Tuesday, and Google, Facebook, and Amazon will also report later in the week.

The second-quarter reporting season has been stronger than expected, providing a support for equities as they climb back into record-high territory. So far, 88% of S&P 500 companies have reported a positive EPS surprise, according to FactSet. If 88% is the final percentage, it will mark the highest percentage since FactSet began tracking this metric in 2008.

All three of the major averages finished at record closing highs last week after the market tumbled at the start of the week on concerns about the spread of the delta variant of Covid and how it would potentially hinder the economic recovery.

The uncertainty briefly sent bond yields lower, and investors jumped into tech stocks. Both bonds and equities rebounded quickly by the end of the week.

Also on Monday, bitcoin surged above $40,000 for the first time since mid-June as sentiment turned bullish following a recent sell-off that pushed the cryptocurrency below $30,000.

Meanwhile, on the data front, sales of new U.S. single-family homes dropped unexpectedly in June, falling 6.6% to a seasonally adjusted annual rate of 676,000 units, the Commerce Department said on Monday. Economists polled by Dow Jones had expected new home sales to increase to 795,000 units in June.

Shares in Hong Kong suffered heavy losses during the Asia trading session on Monday, with the Hang Seng index in the city plummeting 4% as the government's crackdown on tech intensified.

Investors will be watching the Federal Reserve's two-day policy meeting, beginning Tuesday. The Federal Open Market Committee and the Board of Governors are expected to issue a statement on the stance of monetary policy Wednesday. On Thursday, the Commerce Department will report second-quarter GDP data.