Day Traders Diary

8/23/21

The major averages start to the plus side following a volatile week on Wall Street, led today by reopening stocks as the Food and Drug Administration approved its first Covid-19 vaccine. The Dow Jones Industrial Average gained 215 points, or 0.61%. The S&P 500 added 37 points or 0.85% while the Nasdaq Composite rose 1.555% to 14,942.

The major averages are coming off a losing week as investors grew worried that the Fed's potential move to pull back monetary stimulus could slow down the economic recovery that is already challenged by the spread of the delta Covid-19 variant.

Shares of vaccine makers traded higher Monday after the FDA granted full approval for the two-dose Pfizer-BioNTech vaccine for Covid-19. Pfizer shares rose 2.9%. Its partner BioNTech's stock jumped 9% and Moderna is 6% higher. Trillium Therapeutics is soaring on news that it'll be acquired by Pfizer. Its shares are up 189%.

Travel and leisure stocks reacted positively to the news, with Delta and American Airlines moving more than 2% higher. Carnival and Norwegian Cruise Lines gained about 4%.

The immediate impact of the FDA approval of the Pfizer vaccine on efforts to combat the virus could be muted until the U.S. population reaches herd immunity, which "will be a while," said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

However, "to the extent that the general public becomes more comfortable living with the virus, the economy is likely to continue on its upward trajectory," he said. "The economic recovery is what is driving corporate earnings and the stock market to all-time highs, and we expect that to continue through 2021 and into 2022.

Consumer discretionary and retail companies are most likely to benefit from the news, Zaccarelli said, while utilities and consumer staples are likely to underperform, as the market moves higher on increased reopening hopes.

Energy stocks are leading the S&P 500 as oil prices jumped Monday and snapped its longest losing streak since 2019. Diamondback Energy, Occidental Petroleum and Devon Energy gained 6%.

As reopening trades resurface, traders are eagerly awaiting the Jackson Hole symposium for clues on the Fed's timeline for dialing back its $120 billion a month bond-buying program. The event, originally scheduled as an in-person gathering, will now take place virtually on Thursday and Friday for the second year in a row.

The blue-chip Dow fell 1.1% last week, while the S&P 500 declined nearly 0.6%, breaking a two-week winning streak. The tech-heavy Nasdaq dipped 0.7% during the week.