Day Traders Diary

8/27/19

The Dow Jones Industrial Average erased a 155-point rally closing down 120 points as bond yields declined spooking the market and stoking recession fears again. The S&P 500 fell 0.32% to 2,869.16 while the Nasdaq Composite dropped 0.34% to finish at 7,826.95 amid losses in Netflix, Nvidia and T-Mobile.

The spread between the 10-year Treasury yield and the 2-year rate fell to negative 5 basis points, its lowest level since 2007. This is called a yield-curve inversion. Experts fear it because in the past it has preceded recessionary periods. The 3-month Treasury bill rate also traded higher than the 30-year bond yield.

Bank shares fell broadly with Bank of America falling 1% while Citigroup dropped 1.6% and J.P. Morgan Chase slid 1%. The financial sector fell 0.7% for the day. The energy and health care sectors were weak as well while the traditional safe-haven assets like gold rose 0.9%. The utilities, materials and communication services finished modesty higher.