Day Traders Diary

6/11/20

The major averages plunge with the Dow Jones Industrial Average dropping over 1,800 points on pace for its worst day since the March sell-off as coronavirus cases increased in some states that are reopening up from lockdowns. Shares that have surged recently on hopes for a smooth reopening of the economy led the declines.

The 30-stock Dow traded 1,832 points lower, or 6.7%. The S&P 500 slid 5.7% while the Nasdaq Composite dropped 5%. Thursday's losses also put the Dow on pace for its first three-day losing streak in a month. The S&P 500 was headed for its worst day since March 16.

The CBOE Volatility Index spiked 48.0% to 40.79, which reflected increased hedging interest against further equity weakness. The S&P 500 did end the session below its 200-day moving average which is a key technical level many traders observe.

Traders dumped airlines, cruise operators and retailers after piling into those names over the past month amid expectations of a swift economic recovery. Shares of United Airlines, Delta, American and Southwest all dropped more than 10%. Carnival Corp. and Norwegian Cruise Line shares fell more than 14%. Gap and Kohl's shares traded lower by 7.6% and 10.9%, respectively.

Concerns about a second wave of coronavirus cases have risen as U.S. states push deeper into reopening. Texas has reported three consecutive days of record-breaking Covid-19 hospitalizations. Nine California counties are reporting a spike in new coronavirus cases or hospitalizations of confirmed cases, AP reported Wednesday. Treasury Secretary Steven Mnuchin told CNBC's Jim Cramer, however, that "we can't shut down the economy again."

Former FDA Commissioner Scott Gottlieb said states such as Arizona and Texas "never really got rid of the first wave." He added: "It's not a second wave."

Overall coronavirus cases in the U.S. topped 2 million, according to the latest figures from Johns Hopkins University.

The 2-yr yield declined one basis point to 0.16%, while the 10-yr yield declined ten basis points to 0.65% as investors sought some safety in longer-dated maturities. The U.S. Dollar Index rose 0.8% to 96.76.