Day Traders Diary

8/30/21

The major averages closed mixed with the S&P 500 setting another record high on Monday as the market continued to rise in the final days of August. The broad market index gained 19 points or 0.43% setting a new intraday record high. The Nasdaq Composite closed strong up 136 points or 0.90% at all-time highs. The Dow Jones Industrial Average succumbed to profit-taking closing down 55 points or 0.16% led by big tech like Microsoft, Netflix, Apple, Tesla and Amazon.

Shares of Affirm Holdings surged more than 40% after the buy now, pay later company announced a partnership with Amazon on Friday. Amazon's stock rose about 2%.

Financial stocks weighed on the broader market, with Capital One shedding over 5% and Wells Fargo losing 2%. Airline stocks lost ground the European Union recommended that member countries reinstate a ban on non-essential travel to the U.S. due to the Covid-19.

Shares of Paypal, rose nearly 4% after CNBC reported that the company is exploring a stock-trading platform for its U.S. customers. Discount brokerage Robinhood, however, saw its stock fall 8% after SEC Chair Gary Gensler told Barron's that banning the controversial payment-for-order-flow business model was "on the table."

Monday and Tuesday mark the last two trading days of August. Thus far, the S&P 500 is up 2.6% in August. The Dow Jones Industrial Average and the Nasdaq Composite have risen 1.5% and 3.1% this month, respectively. The strong month came as corporate earnings reports for the second quarter showed strong growth for sales and profits.

Stocks appeared to get another boost last week after Federal Reserve Chair Jerome Powell signaled on Firday bond tapering could start this year, but the central bank is in no rush to hike interest rates.

Based on statements from other Fed officials, a tapering announcement could come as soon as the Fed's Sept. 21-22 meeting. Powell said the central bank has "much ground to cover" to reach its other goal of maximum employment.

Stocks could stay largely range-bound until the release of August's jobs report on Friday. Economists polled by Dow Jones expect 750,000 jobs were created in August and the unemployment rate fell to 5.2%.

With the Fed's Jackson Hole meeting in the rearview, investors are now focused on the direction of stocks for the final months of the year. The S&P 500 is up more than 20% in 2021 but the market is also absorbing peak policy stimulus, peak earnings acceleration and peak reopening momentum.

However, a slowdown in earnings and economic growth could still be a positive environment for stocks.

Oil and gasoline futures rose slightly on Monday as investors assessed the damage from Hurricane Ida slamming into the gulf coast. Energy stocks moved modestly lower.