Day Traders Diary

9/8/20

The major averages dropped sharply to start the second week of September led by techs. The Dow Jones Industrial Average plunged 632 points, or 2.3%, to 27,500. The S&P 500 slid 2.8% to 3,331 while the Nasdaq Composite dropped 4.1% to end the day at 10,847. Tuesday's drop put the tech-heavy Nasdaq down 10% over the past three sessions. In that time, the composite has fallen from a record into a correction on and intraday and closing basis.

Facebook and Amazon were both down more than 4% Microsoft and Apple slid 5.4% and 6.7%, respectively. Netflix closed 1.8% lower and Alphabet lost 3.6%. Zoom Video fell by 5.1%. The S&P 500 tech sector dropped 4.6% and closed Tuesday's session more than 11% below an all-time high set on Sept. 2.

Shares of Softbank dropped 7% on Monday in Japan as it was identified as the big options buyer making a bet in the billions on tech stocks continuing to surge. The tech trade could lose some of its firepower if Softbank were to curb those bets.

Semiconductor stocks were under pressure amid simmering U.S.-China trade tensions. Nvidia and Micron fell 5.6% and 3.2%, respectively. Applied Materials dropped 8.7%. Advanced Micro Devices pulled back by 4%. The VanEck Vectors Semiconductor ETF closed 4.4% lower.

Tesla plunged 21.1%, its biggest one-day drop on record, after the S&P Dow Jones Indices failed to add the surging and speculative stock to the S&P 500 after the bell Friday. Investors were betting on inclusion of the stock into the S&P 500, hoping for the stamp of approval on the rally by S&P. The snub shows the risks to the overheating Nasdaq trade.

Wall Street was coming off its first weekly decline in six weeks after a big reversal in major technology stocks. Steep losses in Amazon, Apple, Microsoft and Facebook — 2020′s market leaders — drove the tech-heavy Nasdaq Composite to its worst week since March 20. The Dow and S&P 500 posted their biggest weekly losses since June.

U.S. Treasuries saw increased buying interest amid the decline in equities but closed off highs. The 2-yr yield declined two basis points to 0.14%, and the 10-yr yield declined four basis points to 0.68%. The U.S. Dollar Index rose 0.8% to 93.46. Oil prices were pressured by Saudi Aramco lowering its prices for buyers in Asia and the U.S. due to sluggish demand.