Day Traders Diary

7/23/20

The major averages pulled back in volatile trading on Thursday as selling accelerated in the big cap tech space. The Dow Jones Industrial Average dropped 353 points, or 1.3%, to 26,652. The S&P 500 slid 1.2%, or 40 points, to 3,235, snapping a four-day winning streak. The Nasdaq Composite fell 2%, or 244 points, to 10,461.

Microsoft shares finished down 4% despite reporting better-than-expected earnings for the previous quarter. Apple also finished down over 4% while the other large caps like Amazon, Netflix, Google and Tesla dropped at least 2.5%.

There are concerns that these stocks remain overcrowded, accentuated by Goldman Sachs reportedly recommending investors to continue to avoid Apple stock and the disappointing price action in MSFT and TSLA despite better-than-expected earnings reports from the companies.

Weak economic data also sent support to the sell off. U.S. weekly jobless claims came in at 1.416 million for last week, marking the 18th straight week in which initial claims totaled more than 1 million. Economists expected another 1.3 million workers to have filed initial claims for state unemployment benefits, according to Dow Jones.

This stalling in the labor market comes as lawmakers work on an additional stimulus package for those impacted by the coronavirus pandemic.

On Wednesday, sources told CNBC that Republicans were considering extending a $600-per-week unemployment benefit at a reduced rate of $100 per week. On Thursday, Treasury Secretary Steven Mnuchin said an extension in unemployment benefits will be based on "approximately 70% wage replacement."

U.S. Treasuries finished the session mixed. The 2-yr yield increased two basis points to 0.15%, while the 10-yr yield declined one basis point to 0.59%. The U.S. Dollar Index weakened by another 0.2% to 94.81. WTI crude futures fell 2.0%, or $0.83, to $41.05/bbl.