Day Traders Diary

8/3/21

The major averages moved sharply higher on Tuesday with the S&P 500 setting a new record high as broad market strength outweighed the travel names held back by Covid fears.

The Dow Jones Industrial Average jumped 278 points, or 0.8%, to close at 35,116 after briefly falling more than 100 points earlier in the session. The S&P 500 gained 0.8% to notch a new all-time closing high of 4,423, while the Nasdaq Composite added 0.55% to settle at 14,761. The Dow is within 0.5% of a record.

Tuesday's move for stocks served as something of a mirror image to Monday's market action, which saw a late-day slump drag the Dow and S&P 500 into the red while the tech-heavy Nasdaq held on to a meager gain.

That sort of day-to-day volatility is to be expected after the strong run for stocks since spring of last year, said Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research.

The 10-year Treasury yield stabilized on Tuesday after falling back to near five-month lows on Monday. As yields rebounded from their decline midday back to the unchanged mark, stocks rose.

The Dow was bolstered by stocks tied to the economic recovery, including banks and industrial companies like Caterpillar and 3M. Health care stocks such as Amgen and Johnson & Johnson outperformed as well. In the technology sector, Apple and IBM rose 1.3% and 1.9%, respectively.

On the other hand, shares of companies that would be hit hardest by potential new health restrictions, including airlines and cruise lines, fell on Tuesday, limiting upside for the market.

The spread of the delta coronavirus variant continued to cloud the outlook for the economy. The seven-day average of daily coronavirus cases in the U.S. reached 72,790 on Friday, surpassing the peak seen last summer when the nation didn't have an authorized Covid-19 vaccine, according to data compiled by the Centers for Disease Control and Prevention.

However, on the positive side the U.S. reached the 70% Covid vaccine milestone, according to the CDC.

Oil stocks moved higher were another source of strength, even as the price of West Texas Intermediate crude drifted down to about $70 per barrel. Adam Karpf, a managing director at CIBC Private Wealth focused on energy, said the move in oil was due more to trading patterns than the delta variant taking a major bite out of global growth.

One notable outperformer on Monday was retail brokerage Robinhood, whose stock jumped more than 20% and pushed well above its first price from its initial public offering last week.

Meanwhile, the second-quarter earnings season continues with Under Armour shares rising 7.5% after the company beat estimates on the top and bottom lines. However, Clorox's stock fell more than 9% after a disappointing report.

Shares of Simon Property jumped more than 2% after the mall owner said sales bounced back to pre-pandemic levels, up 80% from a year ago. It also reported a relatively high occupancy rate.

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