What caused the massive drop yesterday ...

Is today a calls or puts day for me🤔

May 22, 2025

Jeff Bishop & Jeff Williams Present:

đź’ĄTHE DAILY CASH CODEđź’Ą

LIVE TODAY @ 1PM ET

On Wednesday, May 21, 2025, U.S. stock markets experienced their steepest decline in a month, driven by a combination of factors that unsettled investors.

Key Factors Behind the Market Drop

1. Weak 20-Year Treasury Auction

A poorly received $16 billion auction of 20-year U.S. Treasury bonds signaled diminished investor appetite for long-term government debt. This led to a spike in yields, with the 20-year yield surpassing 5.1% and the 10-year yield nearing 4.6%, levels not seen since late 2023. The surge in yields raised concerns about the government's ability to manage its growing debt and the potential for higher borrowing costs across the economy. 

2. Concerns Over U.S. Fiscal Outlook

Investor anxiety intensified over the nation's fiscal health, particularly in light of President Donald Trump's proposed tax-cutting bill, which could exacerbate the federal deficit by an estimated $3 to $5 trillion. These concerns were amplified by a recent downgrade of the U.S. credit rating by Moody's, reflecting skepticism about the country's long-term debt management. 

3. Disappointing Retail Earnings

Major retailers reported lackluster quarterly results, with Target citing a drop in consumer confidence and sales. Similarly, TJX and Lowe's posted underwhelming earnings, highlighting the impact of tariffs and inflation on consumer spending. 

4. Ongoing Trade Tensions

The continuation of trade disputes, particularly with Canada and Mexico, contributed to market volatility. Tariffs imposed earlier in the year have disrupted supply chains and increased costs for businesses and consumers, fueling fears of prolonged economic strain. 

Market Impact

All major U.S. stock indexes closed sharply lower:

  • Dow Jones Industrial Average: fell 816.80 points (1.91%) to 41,860.44

  • S&P 500: declined 95.85 points (1.61%) to 5,844.61

  • Nasdaq Composite: dropped 270.07 points (1.41%) to 18,872.64

Smaller companies were hit harder, with the Russell 2000 index tumbling 2.8% to 2,046.56. 

The convergence of rising bond yields, fiscal uncertainty, disappointing corporate earnings, and trade tensions created a challenging environment for investors, leading to the significant market downturn observed on May 21

My feeling today is SPY will push below $580 and potentially work toward that 200 SMA around $573. Today I will be looking to trade SPY puts.

What’s your biggest concern for the markets right now?

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Join me live in the Market Masters room for more details at 9am

Thursday’s schedule:

9 - 9:20am ET Premarket scans w/Jeff Williams

1pm ET  Jeff Bishop & Jeff Williams Present “The Daily Cash Code”

 3 - 4pm ET Join me for  Penny stock “Power Hour” 

Cheers

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