Day Traders Diary

4/20/20

The major averages fell sharply, retreating after back-to-back weekly gains, as a historic decline in U.S. crude prices raised concerns about the economic damage being done by coronavirus shutdowns. A delay in funding the for the depleted small business rescue loan program also weighed on sentiment. The Dow Jones Industrial Average closed 592 points lower, or 2.5%, to 23,650. The S&P 500 slid 1.8% to 2,823 while the Nasdaq Composite pulled back 1% to 8,560.  

Boeing fell more than 6% to lead the Dow lower while Chevron and Exxon Mobil dropped more than 4% each. Energy, real estate and utilities were the worst-performing sectors in the S&P 500, falling more than 3% each. The May contract for West Texas Intermediate, which expires on Tuesday, plunged more than 100% to settle at negative $37.63 per barrel, a bizarre move tied to weak demand outlook and storage capacity issues.

The negative impact on stocks from oil likely would have been worse were it not for lesser declines in oil contracts expiring during future months. WTI's June contract slid over 15.6% to $21.09 per barrel. July's oil contract was down 6.9%. It was a strange phenomenon that analysts chalked up to the collapse in demand for oil contracts expiring this week. Refineries don't need the oil and are near storage capacity with most of the country shut down. The negative price means producers will pay to take this oil off their hands.

New York Gov. Andrew Cuomo said Sunday the state is "past the high point" of new cases, noting the infection rate has fallen along with coronavirus-related hospitalizations. Cuomo added New York will roll out antibody testing this week. In New Jersey, Gov. Phil Murphy said Saturday: "We're flattening the curve."

Walt Disney fell 4.1% while Boeing fell 6.8% underperformed the broader market following a pair of analyst downgrades and negative-sounding reports. Disney is reportedly suspending pay for 100,000 employees, while a GE leasing subsidiary canceled 69 orders of Boeing's 737 MAX.

U.S. Treasuries finished mixed with longer-dated maturities continuing to show relative strength. The 2-yr yield increased one basis point to 0.21%, while the 10-yr yield declined three basis points to 0.63%. The U.S. Dollar Index increased 0.2% to 99.98.