Day Traders Diary

12/9/21

The major averages closed in the red after posting three straight days of gains. Traders took a pause from the rebound rally and turned their attention to inflation data due out on Friday. The Dow Jones Industrial Average ended the trading session at 35,754.69, losing less than a point. The S&P 500 fell 0.72% to 4,667 while the Nasdaq Composite slid 1.7% to 15,517. All the major averages are still on track for a winning week.

Stocks gave back some of their gains from recent days, with the moves higher spurred by the belief that the omicron variant of Covid looks less severe than earlier forms.

Several travel-related stocks, which led the market higher throughout the week, were lower Thursday. Shares of Carnival and Norwegian Cruise Line dipped about 1.6%. United Airlines was 1.7% lower. Travel booking stocks Expedia and Booking Holdings lost 1.5% and 1.7%, respectively. The Invesco Dynamic Leisure & Entertainment ETF fell 1%. All are still on track to end the week higher, however.

Separately, shares of American Airlines fell 0.4% after the company said it's reducing its schedule due to the fact that it's still awaiting Boeing Dreamliner deliveries. Shares of Boeing slid 1.6%.

Rent The Runway shares tumbled by 4.1% after reporting swelling losses and lower than pre-pandemic subscriber growth for its most recent quarter. Electric vehicle maker Lucid saw shares fall 18.3% after the company announced a $1.75 billion offering of convertible senior notes.

Still, there were some positive moves. CVS gained 4.5% after it issued upbeat guidance ahead of its investor day. Home-furnishings retailer RH rose about 5.4% after it reported blowout earnings and lifted the low end of its revenue outlook.

The moves come a day ahead of important inflation news. On Friday, the Labor Department will release the consumer price index for November. Economists surveyed by Dow Jones expect the year-over-year growth rate to be 6.7%. If that is the case, it will mark the biggest move since June 1982.

Markets already are expecting a high inflation reading, with some economists projecting the possibility that the headline number including food and energy could exceed 7%.

That, in turn, poses risks that the Federal Reserve will move more quickly than already anticipated. Fed officials are expected to react to the burst in inflation by announcing next week that the central bank will begin pulling back on its economic aid.

The first step will be accelerating the reduction in the central bank's monthly bond purchases, with markets expecting the Fed to double the taper to $30 billion. That could pave the way for interest rate hikes as soon as the spring of 2022 and mark the latest Fed policy pivot under Chairman Jerome Powell.

On Thursday, the Labor Department reported initial claims for unemployment insurance totaled 184,000, compared to the 211,000 estimated by economists surveyed by Dow Jones.

Ed Moya, senior market analyst with Oanda, said that the market is in a wait-and-see mode ahead of Friday's inflation report.

Elsewhere, the price of bitcoin fell nearly 6% to $47,816.07 late Thursday. On Wednesday, executives from six of the largest cryptocurrency companies testified before the U.S. House Financial Services Committee. Bitcoin, which hit its all-time high about a month ago, has struggled to hold above the $50,000 level after its crash last weekend. That sharp decline coincided with investors' urge to shed risky assets more broadly.

There are some notable earnings reports on Thursday, including from Oracle, Broadcom and Lululemon, all of which report after the market closes.

All comments contained herein are for informational purposes only, and should not be considered as a solicitation to buy or sell any security. The firm does not guarantee the accuracy or completeness of the information or make any warranties regarding results from it's usage.