Day Traders Diary

1/11/22

The major averages rose today as Wall Street appeared to find its footing after a rocky start to the new year. The tech-heavy Nasdaq Composite gained 1.4% or 210 points, building on an afternoon rally from the previous session that snapped a four-day losing streak. The S&P 500 rose 42 points or 0.9%, while the Dow Jones Industrial Average added 183 points, or 0.5%.

Stocks have been volatile to start the year, as rising interest rates have put pressure on equities. However, interest rates cooled on Tuesday, with the 10-year Treasury yield slipping below 1.75%.

Large tech stocks helped support the broader market, with Amazon rising more than 2% and shares of Apple and Nvidia gaining roughly 1.5% each. Other notable gainers included Illumina, which rose 14% after the genomic sequencing company issued a 2022 revenue outlook that was ahead of consensus.

Elsewhere, shares of Exxon Mobil rose more than 3% as U.S. oil prices topped $80 per barrel. At-home fitness stock Peloton jumped more than 7%.

Fed Chair Jerome Powell testified before a Senate committee on Tuesday as part of his re-confirmation process. Powell said that he expected a normalized supply chain to help ease inflation pressures in 2022 but said the Fed would not be afraid to hike rates further than projected if inflation remains high.

However, stocks and bonds both moved higher during Powell's testimony as he did not announce an accelerated change in policy from what the central bank had already signaled.

"Powell noted that the balance sheet runoff will occur later in 2022 and that 'it's a long road back to normal'. On net, the Chair's comments are consistent with a willingness to deliver the liftoff hike in March assuming there isn't a dramatic reversal in the pace of consumer price gains," Ian Lyngen of BMO said in a note to clients.

Jim Paulsen, chief investment strategist at the Leuthold Group, said that while the stock market is likely to encounter a correction this year – and last week's action could perhaps have been the start of one – it will be met by strong company fundamentals.

Tuesday's market moves follow a sharp rally on Monday afternoon, which saw the Nasdaq erase a 2.7% loss to finish slightly higher and snap a four-day losing streak.

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