Day Traders Diary

12/2/19

The major averages started December to the downside as investors digested disappointing manufacturing data along with the latest trade news after capping a month that featured blistering gains.

The Dow Jones Industrial Average fell 268 points, or 0.9% to close at 27,783. The S&P 500 pulled back 0.9% to 3,113.87, its biggest one-day loss since October 8^th. The Nasdaq Composite closed 1% lower at 8,567.

Shares of Facebook, Amazon and Alphabet all dropped at least 1%. Netflix closed nearly 1.5% lower. Roku, which has been one of the hottest stocks of 2019, plummeted more than 15%.

The CBOE Volatility Index, which is regarded as the best fear gauge in the market, rose to 14.3 from 12.6.

Monday's losses on the first trading day of December came after a strong performance last month. The major averages had their biggest monthly gains since June, rallying to record highs. The S&P 500 climbed 3.4% last month while the Dow advanced 3.7% and the Nasdaq rallied 4.5%.

Other underperforming stocks included those in the trade-sensitive Philadelphia Semiconductor Index down 1.5%. Roku was a dog down 15% on a downgraded to Underweight at Morgan Stanley with a $110 price target for valuation reasons.

The mood on Wall Street wasn't as negative as the losses would suggest, though. The market had a great month of November, and today might have been exacerbated by some profit-taking interest. It's also worth reminding that the U.S. is more a services economy than a manufacturing economy.

Consumer spending appeared in good shape on this Cyber Monday. Adobe Analytics estimated online sales would total $9.4 billion by the end of today after Black Friday registered a record $7.4 billion in online sales.

Elsewhere, longer-dated U.S. Treasuries succumbed to increased selling pressure after the Financial Times reported that the Fed is considering a rule to allow inflation to exceed its 2.0% target. The 2-yr yield increased two basis points to 1.84%, and the 10-yr yield increased six basis points to 1.84%. The U.S. Dollar Index declined 0.4% to 97.84.