Day Traders Diary

4/13/20

The major averages pulled back today after a 12% rally last week, the best week since 1974. The Dow Jones Industrial Average ended the day down 328 points or 1.3% to 23,390. The S&P 500 dipped 1% while the Nasdaq actually rose 38 points to 8192. The Nasdaq was led by Amazon, Apple, Intel and Netflix. Within the Dow, Caterpillar was the worst-performing stock falling more than 8% on a downgrade at Bank of America. Financials and real estate led the S&P 500 lower, with both sectors falling more than 3.5%.

Monday's moves came after the market had one of its biggest weekly gains ever last week. The Dow posted its seventh-best weekly performance, rallying 12.7%. The S&P 500 had its biggest one-week gain since 1974, jumping 12.1%. The major averages are more than 18% below the records set in February. Both the Dow and S&P 500 are down 18.5% and 15.2%, respectively, for the year while the Nasdaq has fallen over 9% in 2020.

Johnson & Johnson, JPMorgan Chase, and Bank of America are among the companies scheduled to report earnings this week. Several companies have removed their earnings guidance, citing the coronavirus outbreak, while others have slashed their profit forecasts.

Interestingly, a multinational agreement to cut oil production was unable to stir much enthusiasm within the energy sector down 0.4%. OPEC and other non-OPEC members agreed to cut production by 9.7 mb/d from May 1-June 30, then 7.7 mb/d from July 1-Dec. 31, and then 5.8 mb/d from Jan. 1, 2021-April 30, 2022.

WTI crude futures struggled for direction and ultimately settled the session down 2.0%, or $0.45, to $22.42/bbl. The economy is expected to gradually reopen in May, but the speed and scope of a recovery remained uncertain.

U.S. Treasuries ended the quiet session on a lower note. The 2-yr yield increased one basis point to 0.23%, and the 10-yr yield increased two basis points to 0.75%. The U.S. Dollar Index declined 0.1% to 99.42.