Day Traders Diary

12/24/18

The S&P 500 fell 2.7% on Monday, as follow-through selling and unsettling developments in Washington served to further dampen investor sentiment. Trading action was cut short with the stock market closing early ahead of Christmas Day.

The Dow Jones Industrial Average lost 2.9%, the Nasdaq Composite lost 2.2%, and the Russell 2000 lost 2.0%.

The major indices entered the session with the Dow and Nasdaq having their worst weeks since the financial crisis and the S&P 500 having its worst week since August 2011.

The inability of the major indices to launch a sustainable rebound effort from oversold conditions contributed to the notion that the market has yet to hit a bottom.  Accordingly, buyers went on strike again and stocks succumbed to another broad-based effort to cut exposure to the equity market.

A nettlesome headline that dampened investor sentiment involved the news that Treasury Secretary Steven Mnuchin made an unexpected call to the CEOs of the nation's six largest banks on Sunday.  That call was intended to shore up confidence in the U.S. financial system at a time of heightened market volatility, yet it proved unsettling to the market giving its timing, which followed on the heels of a huge loss for stocks last week, the start of a partial government shutdown, and rumors, which were refuted by Mr. Mnuchin, that President Trump had discussed firing Fed Chair Powell 

President Trump for his part tweeted during today's session that, "...the only problem our economy has is the Fed."

The heightened sense of uncertainty in the market fueled another clear-cut effort to reduce equity exposure. The clearest sign of that effort to reduce exposure to the stock market in general was today's worst-performing sector: the utilities sector (-4.3%), which is often looked at as a "safe-haven" sector during market downturns.  That sector, however, led today's downturn, reflecting the pervasive sense of negativity hanging over the stock market.

All 11 S&P 500 sectors declined at least 2.0% and the major indices all closed at their lows for the day.

The CBOE Volatility Index (VIX), which is often referred to as Wall Street's "fear gauge," rose 18.8% to 35.76 -- its highest level since Feb. 9.

U.S. Treasuries remained higher ahead of the bond market's close at 2:00 p.m ET, pushing the benchmark 10-yr yield down five basis points to 2.74% in a flight-to-safety trade. The U.S. Dollar Index lost 0.5% to 96.50. 

Investors did not receive any notable economic data on Monday.  As a reminder, the stock and bond markets will both be closed Tuesday for Christmas.

• Nasdaq Composite -10.3% YTD
• Dow Jones Industrial Average -11.8% YTD
• S&P 500 -12.1% YTD
• Russell 2000 -17.5% YTD

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  • Headlines provided by Briefing.com