Day Traders Diary

5/26/20

The major averages surged to start the short holiday week as optimism grows about the reopening of the economy and a potential coronavirus vaccine. The Dow Jones Industrial Average gained 529 points, or 2.2%. The 30-stock average briefly traded above 25,000 for the first time since early March before closing just below the mark. The S&P 500 rallied 1.2%, briefly breaking above 3,000 for the first time since March 5. The Nasdaq Composite lagged, rising just 0.2%.

The major averages cut their gains in the final hour of trading after a Bloomberg News report said the U.S. was considering sanctions on Chinese firms and officials over the situation in Hong Kong. That report came after White House National Security Advisor Robert O'Brien said Sunday the U.S. will likely impose sanctions on China if Beijing implements national security law that would give it greater control over autonomous Hong Kong.

The rally today was due in part to American biotech company Novavax saying they will start their first human study of its experimental coronavirus vaccine. The company said it expects initial results on safety and immune responses in July. Last week, another biotech company, Moderna, reported positive development on its vaccine trial where all 45 participants had developed coronavirus antibodies. There are 10 vaccines in clinical evaluation and 114 in pre-clinical evaluation, according to a running tally by Fundstrat.

Bank stocks got a boost amid the optimism over the economic reopening. Citigroup and Wells Fargo were both up more than 8.6% while Bank of America and JPMorgan Chase advanced over 7% each. JPMorgan shares hit their session highs after CEO Jamie Dimon said the bank is "very valuable" at current prices.

The U.S. Treasury curve continued to experience curve-steepening activity amid the market's upbeat economic outlook. The 2-yr yield was unchanged at 0.17%, while the 10-yr yield increased four basis points to 0.70%. The U.S. Dollar Index declined 0.9% to 98.97.