Day Traders Diary

8/4/21

The major averages took a hit on Wednesday after the earnings of a major automaker and a private sector jobs report came in lower than expected.

The Dow Jones Industrial Average shed about 323 points, or 0.9%, and closed near its session low. The S&P 500 slipped by 0.5% while the Nasdaq Composite ticked up 0.1%. The dip for the broader market came after the S&P 500 broke a two-day losing streak on Tuesday to post a record close, bringing its 2021 gains to more than 17%.

Shares of General Motors fell about 7%, weighing on the broader market, after the automaker missed earnings expectations for the second quarter. The automaker did raise its guidance for a key profit metric for the rest of the year.

The ADP private payroll survey showed a gain of 330,000 jobs for July, well short of the consensus estimate of 653,000. The Labor Department's official jobs report, which typically has more impact with investors, will be released on Friday.

Second-quarter earnings and economic data have been strong overall, but some investors are worried that the rebound from last year's pandemic will slow from here.

Cyclical stocks that are tied to the economic recovery were some of the weakest performers on Wednesday. Energy stocks fell, along with oil prices, with Chevron dropping more than 2%. Banks and industrials, such as Honeywell, also struggled. Shares of Coca-Cola lost more than 1%.

This week's labor market readings come as the delta variant of Covid 19 has spread across the U.S., leading to new restrictions and mandates from some companies and local governments.

The 10-year Treasury yield was trading higher near 1.8% on Wednesday after dipping below 1.13% earlier in the session. In recent weeks, lower bonds yields lately have tended to set a more bearish tone for equities, by triggering concerns about the pace of the economic comeback, though that relationship appeared to break down on Wednesday.

Yields trimmed their losses after the ISM Services purchasing manager's index for July came in at a record high, beating expectations.

Federal Reserve Vice Chairman Richard Clarida said Wednesday that he expects the central bank to raise interest rates starting in 2023 and that there is upside risk to inflation.

Meanwhile, shares of Robinhood surged more than 60%, continuing a volatile jump after last week's soft initial public offering.

In the regular trading session on Tuesday, the Dow Jones Industrial Average jumped 278 points, or 0.8%, to 35,116.40. The S&P 500 gained 0.8% to a new all-time closing high of 4,423.15. The Nasdaq Composite rose 0.6% to 14,761.29.

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