Day Traders Diary

12/23/20

The major averages closed mixed even after President Donald Trump criticized the new Covid-19 relief package, a move that could delay the deployment of funds to struggling Americans. The Dow Jones Industrial Average rose 114 points or 0.38% while the S&P 500 gained just 2 points halting a three-day losing streak. The Nasdaq Composite dropped 36 points or 0.29%. after hitting a new all-time high.

Cyclical sectors led the rally with energy and financials as the two best-performing groups, rising 3.2% and 1.9%, respectively. Materials and industrials were also up.

Late on Tuesday, Trump called the new $900 billion Covid relief package an unsuitable "disgrace" and admonished lawmakers to alter the bill's content, especially to increase direct payments to $2,000 from $600. House Speaker Nancy Pelosi agreed with Trump's call for higher payments and said House Democrats will seek to pass a standalone bill by unanimous consent Thursday.

Congress passed the rescue bill this week with $900 billion in pandemic aid after months long negotiations. The package includes additional jobless benefits, more small business loans, direct payments of $600 and funds to distribute Covid-19 vaccines, among other provisions.

Travel-related stocks, which sold off earlier this week, rebounded as concerns about a new coronavirus strain from the U.K. eased. United Airlines and Delta climbed 2.7% each, while Carnival and Norwegian Cruise Line jumped 5.7% and 6.2%, respectively. Health experts said the vaccines in production would be effective against the new variant.

The S&P 500 was coming off its third straight day of losses after its recent rally to record highs. Some investors started taking profits after an unexpected year of solid gains. The broad equity benchmark is up more than 14% with only five trading days left in 2020.

On Wednesday, Pfizer and BioNTech announced a second deal with the U.S. government to supply an additional 100 million doses of their jointly developed Covid-19 vaccine. The deal brings the total number of doses to 200 million, which will be delivered to the U.S. by the end of July next year.

The U.S. so far has vaccinated more than 1 million people, the Centers for Disease Control and Prevention said. The federal government's goal is to inoculate 20 million Americans by the end of the year.

The 2-yr yield increased one basis point to 0.13%, and the 10-yr yield increased four basis points to 0.96%. The U.S. Dollar Index decreased 0.4% to 90.34 amid relative strength in the British pound, which rose 1.0% against the dollar amid reports that an outline of a Brexit trade deal with the EU was reached.