Day Traders Diary

5/13/20

The major averages fall for a second straight day as investors grappled with downbeat remarks from the Federal Chairman and comments from two billionaire investors. The Dow Jones Industrial Average dropped 516 points, or 2%, to 23,247. The 30-stock average had its worst day since May 1. The S&P 500 closed 1.8% lower at 2,820 while the Nasdaq Composite fell 1.6% to 8,863.17.  The tech-heavy index also fell back into negative territory for 2020 after Wednesday's decline.

Fed Chairman Jerome Powell made cautionary comments today saying the economic response has been both timely and appropriately large, but the path ahead is both highly uncertain and subject to significant downside risks. Powell's remarks came after the Labor Department reported last week that a record 20.5 million jobs were lost in April. They also come as several states begin reopening their economies, raising concern among experts about the potential of a second wave of coronavirus cases.

U.S-China tensions have not helped things as the FBI confirmed that China-affiliated cyber actors have targeted U.S. organizations conducting COVID-19-related research. A New York University study today suggests Abbott Lab's COVID-19 test is prone to high false negatives.

Walgreens Boots Alliance and American Express were the worst-performing stocks in the Dow, falling at least 5.4% each. Energy and financials led the S&P 500 lower by falling 4.4% and 3%, respectively. Bank of America and Citigroup both dropped over 4% while Wells Fargo closed 6.3% lower. JPMorgan Chase fell 3.5%.

Cruise line stocks Carnival, Royal Caribbean and Norwegian Cruise Line all fell at least 5%. Those stocks are among those that would benefit from the economy reopening. Airline stocks reached a fresh low for the crisis, with American Airlines falling 5.6% while Delta slid 7.7%. United Airlines fell 9%.

Separately, valuation concerns were voiced by a couple of influential names. Legendary investor Stanley Druckenmiller said the risk-reward for equity is maybe as bad as he's seen it in his career. Appaloosa Management's David Tepper told CNBC that he hasn't seen the market this overvalued since 1999.

U.S. Treasuries ended the session slightly higher. The 2-yr yield declined one basis point to 0.15%, and the 10-yr yield declined three basis points to 0.65%. The U.S. Dollar Index increased 0.3% to 100.25. WTI crude declined 1.6%, or $0.42, to $25.34/bbl.