Day Traders Diary

8/25/21

The major averages quietly close higher helped by banks and reopening stocks as the 10-year Treasury yield climbed higher.

The Dow Jones Industrial Average rose 65 points or 0.11%. The S&P 500 rose 9 points or 0.22% while the Nasdaq Composite added 22 points or 0.15%, both closed for a fifth straight day of gains. The S&P crossed the 4,500 mark for the first time earlier in the day.

The yield on the benchmark 10-year Treasury note rose to 1.347% Wednesday, its highest level since earlier in the month when it yielded as much as 1.364%. That lifted4shares of JPMorgan and Wells Fargo 2%. Regional banks like Zions, Regions Financial and Fifth Third also added 2%.

Travel and leisure stocks were higher too. Air carriers and cruise lines broadly added about 1%. Casino stocks Penn National Gaming and Caesars Entertainment gained 7.5% and 3%, respectively. MGM Resorts added 2.5%.

Chip makers were higher, with Western Digital jumping 8% after a Wall Street Journal report said the company is in advanced talks to merge with Japan's Kioxia Holdings. Nvidia shares rose 2% after the Department of Energy said its new supercomputer will run on the company's computing platform. Micron Technology also rose, by about 3.5%.

Markets have been boosted by signs that delta variant cases could be peaking. Fundstrat's Tom Lee said in a note to clients late Tuesday that the worst may be behind us, citing a falling positivity rate in Florida and Texas.

Johnson & Johnson said on Wednesday that its Covid Vaccine booster shot showed promising results in early stage clinical trials, significantly increasing virus-fighting antibodies. The stock dipped slightly nevertheless.

Delta Airlines said Wednesday it would raise health insurance premiums for unvaccinated employees to cover higher Covid costs. The company has about 75,000 employees and roughly 75% of them are fully vaccinated. On Tuesday Goldman Sachs it will require employees to entering its offices to be fully vaccinated. Delta and Goldman added 1.4%.

Wells Fargo Securities head of equity strategy Christopher Harvey also sees more gains on the horizon. He lifted his year-end S&P 500 target to 4,825 on Tuesday, which is 7.5% above where the index finished the day. Harvey's call is based on its strength through August carrying over into the final months of the year.

Dick's Sporting Goods shares soared 14% and hit an all-time high Wednesday after reporting strong quarterly earnings.

The much anticipated Jackson Hole symposium kicks off on Thursday, where central bankers will potentially provide updates on their plan around tapering monetary stimulus. The Federal Reserve has been purchasing at least $120 billion of bonds per month to curb longer-term interest rates and jumpstart economic growth as the pandemic wreaked havoc on the economy.

Chairman Jerome Powell is slated to make remarks on Friday.