Day Traders Diary

10/8/19

The major averages fell sharply as investor optimism around the upcoming U.S.-China trade talks faded. The Dow Jones Industrial Average closed down 313 points or 1.2% at 26164. The S&P 500 slid 1.6% to 2,893 while the Nasdaq Composite dropped 1.7% to 7,823.

Ahead of the US-China trade negotiations, the U.S. expanded its trade blacklist to include some of China's top artificial intelligence firms to punish Beijing for its treatment of predominantly Muslim ethnic minorities. China's foreign ministry said to "stay tuned" for retaliation following the blacklist expansion. Also weighing on stocks was a statement by the State Department saying that the U.S. would impose a visa ban on Chinese officials linked to the Muslim abuses.

On the plus side, Federal Reserve Chairman Jerome Powell said the central bank will expand its balance sheet once again. He noted this measure will be used as a response to the recent funding issues the bond market faced in recent weeks. Leading the broader market lower were the bank today. Citigroup, Bank of America and J.P. Morgan Chase slid more than 1% each. The S&P 500 industrials sectors pulled back 1.6%, led by declines in Caterpillar and Deere.

Many of the China-sensitive semiconductor stocks, including Ambarella underperformed as many of these companies derive a sizable portion of their revenue from China. The Philadelphia Semiconductor Index dropped 3.1%.

U.S. Treasuries ended a volatile session on a higher note amid growth concerns and an unexpected decline in producer prices for September. The 2-yr yield declined four basis points to 1.42%, and the 10-yr yield declined two basis points to 1.54%. The U.S. Dollar Index increased 0.2% to 99.13. WTI crude declined 0.3%, or $0.13, to $52.66/bbl.