Day Traders Diary

8/26/21

The major averages are pulling back as the S&P 500 fell from a record on Thursday as investors await more details on the Federal Reserve's plan to pull back on monetary stimulus from the central bank's annual symposium on Friday.

Traders were also eying new developments in Afghanistan, which added to the risk-off sentiment. The Pentagon confirmed 12 U.S. service members were killed and 15 wounded after two explosions went off outside the Kabul airport Thursday.

The Dow Jones Industrial average lost about 182 points, or 0.5%. The S&P 500 also retreated 0.5% and the Nasdaq Composite fell 0.6%. Both the S&P 500 and the Nasdaq Composite closed at records Wednesday with the S&P 500 briefly trading above 4,500 for the first time at one point.

Energy stocks were among the hardest hit, with Diamondback Energy down 2.8% while Occidental Petroleum slid 2.4% and APA Corp lost 2.9%. Cruise lines including Carnival, Royal Caribbean and Norwegian dropped 3%. Airlines fell more than 1%.

Mixed economic data did little to change the sour mood. Weekly initial jobless claims came in at 353,000, the Labor Department reported Thursday, a slight increase from the prior week's 349,000 and more than economists expected.

Economic growth totaled 6.6% in the second quarter, according to the Commerce Department's second reading released on Thursday. That was a slight revision upward from the 6.5% annual increase previously reported, but slightly lower than the Dow Jones estimate of 6.7%.

The highly anticipated Jackson Hole symposium from the Fed will be held virtually this year on Friday, with many central bank speakers making remarks to the media beginning Thursday. At the event, central bankers could provide updates on their plan around tapering the Fed's monthly bond purchases.

James Bullard, St. Louis Fed President, said the central bank should begin those efforts soon and wrap them up by the end of March to prevent the U.S. economy from overheating.

Salesforce is leading the Dow, with shares 4% higher on fiscal second-quarter earnings and forward guidance that exceeded analysts' estimates. Another cloud company, NetApp, added more than 5%.

Zoom Video shares jumped more than 1.6% after Morgan Stanley upgraded the stock and predicted 18% upside.

Shares of discount retailers Dollar Tree and Dollar General dropped 11% and 4%, respectively, after reporting quarterly results. Abercrombie & Fitch tumbled 10.5% as supply chain constraints and delayed back-to-school purchases hurt sales.