Day Traders Diary

11/20/20

The major averages pulled back to end the week as rising new coronavirus cases, coupled with questions around central-bank funding for key emergency programs, cast doubt on a swift economic recovery. The Dow Jones Industrial Average dropped 219 points, or 0.8%, to close at 29,263. The S&P 500 dipped 0.7% to 3,557. The Nasdaq Composite pulled back by 0.4% to end the day at 11,854.

Boeing and Salesforce were the worst-performing stocks in the Dow, falling 2.9% and 2.5%, respectively. Technology and industrials dropped 1.1% and 0.9%, respectively, to lead the S&P 500 lower.

The U.S. seven-day average of daily new Covid-19 infections now stands at 165,029, according to a CNBC analysis of John Hopkins data, 24% higher than a week ago. On Thursday alone, a record 187,833 cases were reported. Many states have rolled back reopening plans and implemented fresh restrictions to curb the spread.

California Gov. Gavin Newsom on Thursday issued a "limited Stay at Home Order" on a majority of the state's residents, requiring nonessential work and gatherings to cease between 10 p.m. and 5 a.m. Meanwhile, the Centers for Disease Control and Prevention advised Americans against traveling for Thanksgiving.

JPMorgan economists wrote in a note that coronavirus-related restrictions will "likely deliver negative growth" in the first quarter of 2021. They also downgraded their first-quarter GDP outlook to a contraction of 1%, making them the first Wall Street economists to forecast negative GDP for the start of next year.

Friday's losses led the Dow and S&P 500 to their first weekly declines in three weeks. The Dow fell 0.7% this week and the S&P 500 lost 0.8% in that time period.

Also weighing on sentiment Friday was a disagreement between the Treasury Department and the Federal Reserve over the continuation of funding for some of the emergency programs implemented during the recession.

Treasury Secretary Steven Mnuchin is seeking to end a handful of the Fed facilities that bought corporate bonds as well as the Main Street Lending Program targeted towards small- and medium-sized businesses. The move has drawn pushback from the central bank, which said the programs continue to serve an important role to support the vulnerable economy.

U.S. Treasuries finished on a higher note, more so on the longer-end of the curve. The 2-yr yield decreased two basis points to 0.15%, and the 10-yr yield decreased three basis points to 0.83%. The U.S. Dollar Index increased 0.1% to 92.39. WTI crude rose 1.0%, or $0.42, to $42.17/bbl.