Day Traders Diary

12/21/20

The major averages closed mixed following a sharp sell off to start the day on reports of a new Covid strain in the U.K. The broad equity index dipped 0.4%, or 14 points, to end at 3,694 after falling nearly 2% at its session low. The Nasdaq Composite fell 0.1%, or 13 points, to 12,742. The Dow Jones Industrial Average erased a 400-point loss to eke out a small gain thanks to strength in Nike and bank shares.

Nike popped nearly 5% to hit a record high on the back of strong earnings. Bank stocks jumped in unison with JPMorgan and Goldman up 3.8% and 6.1%, respectively, after the Federal Reserve announced it will allow the industry to resume share buybacks in the first quarter of 2021.

Travel-related stocks initially fell sharply on news of an infectious new coronavirus strain in the U.K., which triggered more severe lockdowns and travel restrictions across Europe. However, some believe the concerns over the new virus variant could be overblown.

Gottlieb said the Covid virus did not seem to be mutating its proteins as rapidly as the seasonal flu and estimated that vaccines would need to be updated about every three years.

Eli Lilly said Monday that its Covid antibody therapy "should maintain full activity against the new strain" identified in the U.K.

Shares of airlines and cruise line operators closed well off their session lows. Norwegian finished the day 1.6% lower and Royal Caribbean dipped 0.7%. American Airlines fell 2.5% after sliding more than 5% earlier, while United Airlines dipped 1.5%. More than two-dozen countries from Italy to India to El Salvador have banned flights from the U.K. or travelers who have been in the country.

Tesla dropped more than 6% as it entered the S&P 500 with a 1.69% weighting in the index, the fifth largest. The stock fell to its session following a report that Apple is moving forward with its plan to produce electric vehicles.

Monday's choppy trading came as lawmakers reached an agreement on a $900 billion relief package, which would provide direct payments and jobless aid to struggling Americans. The announcement came after negotiators resolved a key sticking point by rolling back the Federal Reserve's emergency lending powers.

U.S. Treasuries finished mixed, but notably, the 10-yr Treasury note started to come down from early highs well before equities started to rebound. The 2-yr yield increased one basis point to 0.12%, while the 10-yr yield decreased one basis point to 0.94% after touching 0.88% at its low. The U.S. Dollar Index gained 0.2% to 90.17.