Day Traders Diary

12/1/20

The major averages started off the month of December on the plus side with the S&P 500 hitting a new record following a historic November.

The Dow Jones Industrial Average climbed 185 points, or 0.6%, to 29,823. The 30-stock gauge jumped more than 400 points at its session high to a new intraday record. The S&P 500 rose 1.1%, or 40 points, to 3,662, marking a fresh record closing high. The tech-heavy Nasdaq Composite gained 1.3%, or 156 points, to 12,355, also notching a record close.

Apple popped 3.1% to lead the 30-stock Dow higher. Communication services and financials were the best-performing sectors in the S&P 500, rising at least 1.6% each.

Sentiment got a lift after a group of lawmakers unveiled a $908 billion stimulus plan, which includes more than $200 billion in Paycheck Protection Program small business loans. The news gave stocks a boost and pushed the 10-year Treasury yield above 0.9%. However, Senate Majority Leader Mitch McConnell did not endorse the bipartisan plan, saying he wants to pass a "targeted relief bill" instead.

The Dow rallied 11.8% in November, posting its best one-month performance since January 1987. The S&P 500 and Nasdaq Composite rose 10.8% and 11.8%, respectively, for their strongest monthly advances since April. After November's gain and Tuesday's pop, the S&P 500 is up 13.8% for 2020.

November's rally came amid a slew of positive coronavirus vaccine news, which lifted hope of a strong economic recovery. In the latest development on that front, Pfizer and BioNTech applied to the European Medicines Agency for conditional marketing authorization of their coronavirus vaccine, potentially enabling the vaccine to be used in Europe before the end of 2020.

Separately, shares of Zoom Video fell 15%, succumbing to profit-taking interest following its better-than-expected earnings report and upbeat guidance. Moderna fell 7% after starting the day with a 16% gain.

In the U.S. Treasury market, the 2s10s yield curve spread widened to a 2020 high of 76 bps. The 2-yr yield increased three basis points to 0.17%, while the 10-yr yield rose nine basis points to 0.93%. The U.S. Dollar Index fell 0.8% to 91.16 amid relative strength in the euro, which was indicative of expectations for a European recovery.