Day Traders Diary

9/8/21

The major averages pulled back again as the Dow Jones Industrial Average fell for a third day on Wednesday as investors reassess the economic growth outlook following a smooth ride in the market so far this year.

The Dow fell 68 points or 0.2%. The S&P 500 dipped 5 points or 0.2%. The technology-heavy Nasdaq Composite fell 87 points or 0.57% after closing at a record on Tuesday.

The 30-stock average is in the red for its third trading day in a row. On Tuesday, the Dow fell more than 260 points, adding to Friday's losses after a disappointing August jobs report. September's outlook also remains clouded by the coronavirus delta variant.

Shares of Coinbase fell more than 3% after the cryptocurrency exchange revealed it received a notice of possible enforcement action from the Securities and Exchange Commission. Coupa Software fell 2% despite its better-than-expected quarterly financial results.

Many investors are bracing for volatility in September, one of the seasonally weakest months of the year. Price swings could make a comeback, especially with the S&P 500 up more than 20% this year without a single 5% pullback.

The S&P 500 is down 0.4% this month. The Dow is down about 1% and the Nasdaq is about flat in September.

One of the catalysts for a sell-off could be the Federal Reserve and the potential for it to pull back an unprecedented monetary stimulus to support the economy throughout the pandemic. Fed Chairman Jerome Powell has indicated that the central bank is likely to begin withdrawing some of its easy-money policies before year-end, though he still sees interest rate hikes in the distance.

On Wednesday, the Labor Department released the Job Openings and Labor Turnover Survey, which showed job openings rose to a record 10.9 million in July. Job openings outnumbered the unemployed by more than 2 million in July as companies struggled to fill a record number of vacancies.

In the Federal Reserve's periodic "Beige Book," the central bank said U.S. businesses are experiencing rising inflation that is being intensified by a shortage of goods and likely will be passed onto consumers in many areas.

The Fed also reported that growth overall had "downshifted slightly to a moderate pace" amid rising public health concerns during the July through August period that the report covers.

The S&P 500 fell 0.3% on Tuesday in relatively thin trading following the Labor Day weekend. The blue-chip Dow dropped 260 points, weighed down by 3M and Honeywell, while the tech-heavy Nasdaq Composite rose less than 0.1% to eke out a record close.

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