Day Traders Diary

8/12/19

The major averages finished sharply lower as bond yields resumed their August spiral lower, raising concerns about the state of the economy. The benchmark 10-year Treasury yield, which fell to its lowest since 2016 last week, dipped to 1.63%. The spread between 2-year and 10-year Treasury yields narrowed to only 6 basis points on Monday, near its lowest level since 2007.

Dow Jones Industrial Average finished down 391 points, or 1.49%, dipping below 26,000 at 25896. The S&P 500 fell 1.24% and the Nasdaq Composite declined 1.2%. Bank stocks declined as interest rates dived. Bank of America and Goldman Sachs both dropped more than 2%, while J.P. Morgan slid 1.87%. The SPDR S&P Bank ETF is down 2.1% on Monday.

Besides interest rates, intensified Hong Kong protests, which soured investor sentiment already aggravated by the trade dispute between Washington and Beijing. Hong Kong International Airport cancelled all departures for the remainder of the day, citing serious disruptions due to intensifying protests.

Trade bellwether Caterpillar fell 2.2% and Boeing declined more than 1%. Retailers, who are targeted in the latest round of China tariffs, are under pressure as Office Depot tanked 5.6% while Nordstrom slipped 2.35%.

Adding to the geopolitical risks were the Argentina's election results which took markets by surprise as the country's center-right leader, President Mauricio Macri, performed poorly in primary elections. The outcome triggered a sell-off in peso and Argentina's stocks, which are down 35%.