Day Traders Diary

4/27/20

The major averages soared as investors cheered the possibility of reopening the economy after the coronavirus outbreak. The Dow Jones Industrial Average closed up 358 points higher, or 1.5%, at 24,133. The S&P 500 gained 1.5% to close at 2,878 while the Nasdaq Composite advanced 1.1% to 8,730.

Monday's gains put the S&P 500 on pace for its biggest one-month gain since 1987 with an 11.4% surge in April. The Dow is up 10.1% month to date; that would be its best monthly performance since 2002.

Stocks that would benefit most from an economic reopening led the way higher on Monday. MGM Resorts and Carnival both climbed more than 8%. Gap and Kohl's gained 12.9% and 17.7%, respectively.

States including Alaska, Georgia, South Carolina, Tennessee and Texas are beginning to allow restaurants and other establishments to serve customers. Ohio Gov. Mike DeWine said consumer retail and services can start reopening on May 12.

New York Gov. Andrew Cuomo said Sunday the state plans to reopen its economy in phases. The first phase, Cuomo said, would involve New York's construction and manufacturing sectors.

JPMorgan Chase and Disney were the best-performing Dow stocks, rising more than 4% each. The financials sector led the S&P 500 higher, climbing more than 3%. Citigroup shares rallied more than 6% while Wells Fargo and Bank of America were each up over 4%.

Wall Street's coming off its first weekly decline in three as a record plunge in crude prices last Monday and Tuesday sent investors on a wild ride. Both the Dow and S&P 500 fell over 1% last week while the Nasdaq Composite dipped 0.2%.

Overseas, Italy, France, Spain initiated steps to reopen their economies, but some attention should also be given to the Bank of Japan. The central bank lifted the cap on its JGB bond purchases, which some attributed to the initial gains in stocks, and said it will be increasing its purchases of corporate bonds and commercial paper.

U.S. Treasuries finally showed some weakness amid the bullish price action in equities. The 2-yr yield increased three basis points to 0.23%, and the 10-yr yield increased six basis points to 0.66%. The U.S. Dollar Index declined 0.3% to 100.07.