Day Traders Diary

11/17/20

The major averages took a breather from their record run as the rally cooled off amid a sharp decline in drug store shares and disappointing economic data. The Dow Jones Industrial Average dropped 167 points, or 0.6%, to close at 29,783. The S&P 500 dipped 0.5% to 3,609 while the Nasdaq Composite fell 0.2% to 11,899.

Shares of pharmacy owner CVS Health and Dow-member Walgreens Boots Alliance dropped after Amazon launched a pharmacy business, which allows free delivery of medications for Prime members. Walgreens shares dropped 9.6% and CVS lost 8.6%. Amazon shares gained 0.2%.

Home Depot added to the decline, falling 2.5% despite a third-quarter earnings beat. Its sales also surged about 24% compared with a year ago as pandemic home improvement buying continued. Walmart dipped as well, closing 2% lower even after posting better-than-expected results for the previous quarter.

Sentiment also took a hit after data showed retail sales increased less than expected in October. Retail sales rose 0.3% last month, versus a 0.5% gain expected by economists polled by Dow Jones.

Tesla shares bucked the market's negative trend, jumping 8.2% after S&P Dow Jones Indices said the electric car maker would join the S&P 500 index, effective Dec. 21. It was a long anticipated move for the surging stock. Before Monday, the shares had already more than quadrupled this year.

On Monday, the Dow and S&P 500 jumped after Moderna released trial data showing its coronavirus vaccine was more than 94% effective, further raising expectations of a sharp economic recovery.

That marked the second positive announcement related to a coronavirus vaccine in a week. Pfizer and BioNTech said Nov. 9 that their Covid-19 vaccine candidate was more than 90% effective among participants in a late-stage trial.

Value stocks led the advance on Monday, building on their strong gains from last week. The iShares Russell 1000 Value ETF (IWD) jumped 1.9%, while its growth counterpart closed higher by just 0.5%. Value names lagged growth on Tuesday, however, as IWD fell 0.4% and the iShares Russell 1000 Growth ETF (IWF) closed 0.2% lower.

U.S. Treasuries ended the session with small gains, pushing yields lower. The 2-yr yield decreased two basis points to 0.16%, and the 10-yr yield decreased three basis points to 0.87%. The U.S. Dollar Index decreased 0.2% to 92.44. WTI crude futures increased 0.2% to $41.43/bbl.