Day Traders Diary

12/2/20

The major averages closed mixed taking a breather following a strong start to the month that lifted the S&P 500 and Nasdaq Composite to record highs in the previous session. The Dow Jones Industrial Average rose just 38 points, or 0.1%. The S&P 500 posted a marginal gain while the Nasdaq Composite slid 0.1%.

Dow component Salesforce announced it is acquiring messaging platform Slack for $27.7 billion. The Slack deal marks the cloud software vendor's largest deal ever. Shares of Salesforce were off by 8.4%.

That decline was offset by gains in bank and energy names. JPMorgan Chase and Goldman Sachs rose 1.2% and 2.2%, respectively. Chevron advanced 3.4%. Boeing also popped more than 3%.

Wednesday's moves came after Senate Majority Leader Mitch McConnell rejected a bipartisan proposal for a $908 billion stimulus package aimed at breaking the stalemate over new stimulus in Congress. News of the new aid package helped lift the major averages on Tuesday, the first day of December. Those gains propelled the S&P 500 and Nasdaq to record highs.

House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer said in a joint statement Wednesday that the bipartisan bill unveiled on Tuesday should be used as "basis for immediate bipartisan, bicameral negotiations."

Equities were also under pressure on Wednesday after President-elect Joe Biden told The New York Times he would not immediately remove tariffs imposed by the Trump administration targeting China.

Stocks are coming off of their best month in more than three decades. The Dow gained more than 11% in November, notching 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.

November's rally was bolstered by positive vaccine news from several pharmaceutical companies. The developments pushed investors into stocks that hinge on a strong economic recovery. Investors digested more positive Covid-19 vaccine news on Wednesday. The UK authorized the Pfizer-BioNTech vaccine for use, marking another step in the global battle against the pandemic.

Despite the positive vaccine data, Federal Reserve Chairman Jerome Powell called the economic outlook "extraordinarily uncertain" on Tuesday when he and Treasury Secretary Steven Mnuchin spoke before Congress this week as part of mandated updates on CARES Act funding. Mnuchin did call on Congress for $300 billion in aid for restaurants heading into the winter months.

On the data front, private payrolls rose by 307,000 in November, according to ADP. Economists polled by Dow Jones expected 475,000 private jobs were added in November. The number was also the lowest since July. ADP's report comes days ahead of the Labor Department's monthly jobs report.

U.S. Treasuries finished mixed with longer-dated Treasuries extending recent losses amid stimulus hopes. The 2-yr yield decreased one basis point to 0.16%, and the 10-yr yield increased one basis point to 0.95%. The U.S. Dollar Index decreased 0.2% to 91.09. WTI crude futures rose 1.6%, or $0.72, to $45.28/bbl.