Day Traders Diary

9/20/21

The major averages started the week in the red as investors continued to flock to the sidelines in September amid several emerging risks for the market. The S&P 500 fell 1.7% to 4,357 with every sector registering losses, posting its worst daily performance since May 12. The Dow Jones Industrial average lost 614 points, or 1.8%, to 33,970, for its biggest one day drop since July 19. At its session low, the 30-stock stock tumbled 971 points. The tech-heavy Nasdaq Composite dropped 2.2% to 14,713.
Investors fear a contagion sweeping financial markets from the troubled China property market. Hong Kong equities saw a big sell-off during the Asia trading session on Monday. The benchmark Hang Seng index plunged 4% with embattled developer China Evergrande Group on the brink of default.
The Federal Reserve begins a two-day meeting Tuesday and investors are worried the central bank will signal it's ready to start pulling away monetary stimulus amid surging inflation and improvement in the job market.
Covid cases because of the delta variant remain at January levels as colder weather approaches in North America.
September has the worst track record of any month, averaging a 0.4% decline, according to the Stock Trader's Almanac. History shows the selling tends to pick up in the back half of the month.
Investors are also concerned about brinkmanship in DC as the deadline to raise the debt ceiling approaches. Congress returned to Washington from recess rushing to pass funding bills to avoid a government shutdown.
Monday's sell-off briefly pushed the S&P 500 5% below its last record on an intraday basis. It's been a long time since the market has faced a sell-off of this magnitude as investors continued to buy the dip with fiscal and monetary stimulus backstopping the markets. The index closed the session 4.1% below its record high from Sept. 2.
Stocks linked to global growth led the broad-based sell-off Monday. Ford lost more than 5%. General Motors and Boeing fell 3.8% and 1.8%, respectively. Steel producer Nucor shed 7.6%
Energy stocks tumbled as WTI crude oil fell nearly 2% on concerns about the global economy. The energy sector slid 3%, becoming the worst-performing group among the 11 S&P 500 groups. APA shed more than 6%, while Occidental Petroleum and Devon Energy both dropped over 5%.
Bond prices gained as investors sought safety. The move pushed the 10-year Treasury yield down by 6 basis points to 1.31%.
Big bank stocks took a hit as the falling rates may crimp profits. Bank of America and JPMorgan Chase dropped 3.4% and 3%, respectively.
The Cboe Volatility index, Wall Street's fear gauge, jumped above the 25 level on Monday, the highest since May.
Stocks have struggled so far in September in line with historical trends. For the month, the Dow is off 3.9%. The S&P 500 is lower by 3.7% and the Nasdaq Composite has fallen 3.6%.