Day Traders Diary

8/3/20

The major averages rose to start the month of August as Wall Street tries to build on its four-month winning streak. The Dow Jones Industrial Average closed up 236 points or 0.9%. The Nasdaq Composite jumped 1.5% to an all-time high. The S&P 500 gained 0.7%.

Shares of major tech companies led the way higher for the broader market. Microsoft gained more than 5% after confirming reports about being in talks to buy social video app TikTok in the U.S. The talks come even as President Donald Trump threatens to ban TikTok because of security concerns over its parent company's ties to China. Apple and Netflix rose 2.5% and 2%, respectively.

Outside the tech space, Eli Lilly rose a percent after announcing the start of a phase 3 trial for their experimental coronavirus antibody treatment. In deal-making news, Marathon Petroleum agreed to sell its Speedway business to 7-Eleven for $21 billion in cash. ADT rose 56% as they will partner with Alphabet's Google to develop a next generation smart home and security system. Google will take a 6.6% stake in ADT.

On the economic front, better-than-expected manufacturing data lifted the averages. The Institute for Supply Management's manufacturing PMI rose to 54.2 in July, topping a Dow Jones estimate of 53.8.Investors also cheered an earnings season in which companies are beating estimates at a record rate.

Data compiled by FactSet showed that, through Friday, 84% of S&P 500 companies have beaten earnings expectations. If beat rate stays at that level, it will be the highest since FactSet started tracking the metric in 2008.

The major averages were coming off their fourth consecutive monthly gain in July, with the S&P 500 rising 5.5% and the Nasdaq jumping more than 6% in that time period. The Dow gained 2.4% last month.

U.S. Treasuries ended the session slightly lower. The 2-yr yield increased one basis point to 0.11%, and the 10-yr yield increased two basis points to 0.56%. The U.S. Dollar Index advanced 0.3% to 93.60. WTI crude futures rose 1.8%, or $0.72, to $41.02/bbl.