Day Traders Diary

5/12/20

The major averages fell sharply on Tuesday, giving back some of their recently strong gains, as investors evaluated the latest attempts to reopen the economy. The Dow Jones Industrial Average closed down 457 points or 1.9%, at 23,764. The S&P 500 dropped 2.1% to 2,870 while the Nasdaq Composite also fell more than 2% to 9,002. Tuesday's decline snapped a six-session winning streak for the Nasdaq.

Stocks poised to benefit from economies reopening rolled over in afternoon trading, dragging down the major averages. Bank of America, Citigroup, JPMorgan Chase and Wells Fargo all fell at least 3%. Nike and Disney both closed 2.9% lower. Investors also cooled off from buying technology stocks. Facebook, Amazon and Apple all slid more than 1%. Netflix and Alphabet both closed 2% lower.

Several states, including Georgia, Texas and Tennessee have already started to let nonessential businesses resume operations. New York officials have also laid out a plan to gradually reopen the state.More than 4 million cases have been confirmed globally, according to Johns Hopkins University. In the U.S. alone, over 1.3 million infections have been confirmed.

Senator Lindsey Graham introduced legislation to require China to cooperate with a coronavirus investigation or face sanctions, pressuring market sentiment.

Despite Tuesday's losses, the Nasdaq remained up about 1.6% for the year as Wall Street has recently loaded up on shares of major tech companies. Shares of Amazon and Netflix both soared more than 30% this year, while Microsoft gained 18%. Chipmaker Nvidia hit a fresh all-time high on Tuesday, bringing its 2020 gains to 38%.

Bank and airline stocks were among today's weakest performers. Bank stocks were pressured by a modest decline in Treasury yields and by President Trump rehashing calls for negative interest rates. Airline stocks were pressured by Boeing CEO Calhoun telling NBC's "Today" show that a major U.S. airline could go bankrupt because of COVID-19 disruptions.

Conversely, shares of Uber and GrubHub exhibited strength after it was reported that Uber made a bid to acquire GrubHub.

As previously noted, U.S. Treasury yields declined amid an uptick in demand for the safe-haven asset. The 2-yr yield declined two basis points to 0.16%, and the 10-yr yield declined five basis points to 0.68%. The U.S. Dollar Index declined 0.3% to 99.97. WTI crude rose 5.3%, or $1.30, to $25.76/bbl.