Day Traders Diary

11/12/20

The major averages pulled back as an increasing number of U.S. coronavirus cases are raising concerns over the health of the economy and further shutdowns. The Dow Jones Industrial Average closed down 318 points or 1.3%. The S&P 500 slid 1% while the Nasdaq Composite dropped 0.65%. Thursday's decline left the S&P 500 just 0.5% above its Friday closing level of 3,509.44, close to wiping out the index's vaccine rally.

The major averages turned sharply lower after Federal Reserve Chairman Jerome Powell said the U.S. economic outlook remained uncertain even after positive vaccine news from earlier this week.

Thursday's moves came as the number of coronavirus cases continues to rise. On Wednesday alone, a record of more than 144,000 infections were confirmed in the U.S., bringing the nationwide tally to more than 10 million. Chicago issued a stay-at-home advisory Thursday aimed to curb the spread, while New York has imposed a new curfew on restaurants, bars and gyms.

Travel and bank stocks were among the biggest laggards on Thursday. United Airlines fell more than 4%, while Carnival dropped 7.2%. JPMorgan Chase, Citigroup and Wells Fargo were all down more than 1%.

Earlier this week, stocks dependent on an economic recovery rallied, sparked by an announcement from Pfizer and BioNTech that the companies' Covid-19 vaccine candidate appeared to be more than 90% effective in its phase three trial.

More positive news on the vaccine front could come soon, as Moderna announced on Wednesday evening that its phase-three trial had accrued enough cases of the coronavirus to submit the preliminary results to an independent safety monitoring board.

The rally for equities after the Pfizer news followed a strong election week for stocks. Rick Rieder, head of the global allocation team at BlackRock, said Wednesday on "Closing Bell" that he expected stocks to continue to rise through the end of the year, though he expected trading to be choppy.

But CNBC's Jim Cramer thinks some on Wall Street have become too optimistic about the market given the recent increase in Covid-19 infections.

"I think there's too many people who are positive," Cramer said on "Squawk Box." "Shouldn't we just be thinking about what happens when all these businesses close?" he said, referencing the potential for lockdown measures being implemented to curb the outbreak.

On the data front, initial weekly jobless claims fell last week to 709,000 from 757,000 in the prior week, the Labor Department said.