Day Traders Diary

6/15/20

The major averages closed higher recovering from earlier losses, as the Federal Reserve announced further measures to support the market amid the coronavirus pandemic. The Dow Jones Industrial Average closed up 157 points higher, or 0.6%, The S&P 500 gained 0.8% while the Nasdaq Composite advanced 1.4%.

Shares of Facebook, Amazon, Netflix and Apple led the gains, rising more than 1% each. JPMorgan Chase, Citigroup, Wells Fargo and Bank of America gained at least 0.8%.

Earlier in the day, the major stock averages had fallen sharply. The Dow traded more than 760 points lower before rebounding. The S&P 500 and Nasdaq fell as much as 2.5% and 1.9%, respectively.

The Fed said it would buy individual corporate bonds, marking a broader approach to corporate bond buying. The Fed previously had indicated that it eventually would buy bonds on the primary market, but Monday's announcement marked an expansion of that into the secondary market. This latest announcement also shows the Fed will continue to support credit markets during the coronavirus.

The iShares iBoxx Investment Grade corporate bond ETF (LQD) shot up to its session high after the Fed announcement, closing more than 1% higher.

Monday's action followed a big pullback last week triggered by rising fears of a resurgence in the virus as well as investors' profit-taking after the massive comeback.

The Dow and S&P 500 lost 5.5% and 4.7% last week, respectively, while the Nasdaq shed 2.3%. All three major equity benchmarks suffered their worst week since March 20.

Stay-at-home stocks continued to outperform the broader market amid the threat of a second wave of coronavirus infections. Shopify rose 8% after announcing a new partnership with Walmart.

U.S. Treasuries exhibited an early flight-to-safety trade, which then unraveled with the rebound in equities. The 2-yr yield and the 10-yr yield ended the session unchanged at 0.18% and 0.70%, respectively. The U.S. Dollar Index declined 0.6% to 96.71. WTI crude futures rose 1.9%, or $0.68, to $36.94/bbl.