Day Traders Diary

8/31/20

The major averages closed mixed wrapping up their best August performances since the 1980s. The Dow Jones Industrial Average slid 223 points, or 0.8%, to 28,430 while the S&P 500 dipped 0.2% to close at 3,500. The Nasdaq Composite outperformed with a 0.7% gain and ended the day at 11,775.

Declines in bank stocks pressured both the Dow and S&P 500. JPMorgan Chase, Citigroup, Bank of America and Wells Fargo were all down more than 2%, following Treasury yields lower. Yields fell after Federal Reserve Vice Chairman said rates won't go up just because unemployment goes down.

Meanwhile, the Nasdaq got a lift after two big stock splits took effect Monday. Apple shares gained 3.4% as a 4-for-1 split took effect. Tesla shares added 12.6% following its 5-for-1 split.

The Dow rallied 7.6% this month for its biggest August gain since 1984. The S&P 500 rose 7% month to date for its best August performance since 1986.

The S&P 500 also notched its fifth consecutive monthly advance. Since 1950, there have only been 26 instances in which the broader market index has risen for five straight months, according to data from Suntrust/Truist Advisory. In 96% of those occasions, the S&P 500 has sported a gain a year after the streak.

This month's gains have pushed the S&P 500 to record levels, officially confirming a new bull market has started. The August rally built on the market's sharp rebound off the March 23 lows. Since then, the Dow and S&P 500 are up 55.7% and 59.4%, respectively.

In an apparent long-term bet on the global economy, Warren Buffett announced Sunday that his Berkshire Hathaway conglomerate had acquired stakes of more than 5% in Japan's five-leading trading companies. Those companies are Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui & Co. and Sumitomo Corp. The five businesses import everything from metals to food into Japan and provide services to manufacturers.

Separately, CNBC reported that a TikTok deal could be announced as soon as tomorrow. Front-runners Microsoft (MSFT 225.53, -3.38, -1.5%), Walmart (WMT 138.85, -1.45, -1.0%), and Oracle (ORCL 57.22, -0.66, -1.1%) declined at least 1.0% today.

U.S. Treasuries saw modest gains amid the underlying weakness in the stock market. The 2-yr yield declined two basis points to 0.13%, and the 10-yr yield declined four basis points to 0.69%. The U.S. Dollar Index declined 0.2% to 92.19. WTI crude futures declined 0.8%, or $0.35, to $42.62/bbl.