Day Traders Diary

4/5/22

Stocks fell on Tuesday, hitting session lows in the final hour of trading amid remarks from Federal Reserve Governor Lael Brainard indicating a more aggressive approach to the central bank's tightening policy. The Dow Jones Industrial Average lost 280 points, or 0.8%, while the S&P 500 fell 57 points or 1.3% after posting two straight days of gains. The Nasdaq Composite shed 328 points 2.3%, stepping back a 1.9% pop in the prior session.

After opening the day slightly positive, stocks fell and rates hit their highs after Brainard, who is typically considered one of the more dovish Fed members, said the central bank needs to shrink its balance sheet "rapidly" to drive down inflation.

Following her comments, the 10-year Treasury yield jumped to 2.56% and hit its highest level since May 2019.

Recessionary fears continued to spook investors on Tuesday and Deutsche Bank became the first major Wall Street bank to forecast a U.S. recession is ahead, citing the Fed getting more aggressive to fight inflation.

Tech shares were lower, led by chip stocks, consolidating their big gains from Monday. Some believe this group could be hurt the most by the Fed's hiking campaign as investors take less risk and buy stocks with steady profits, rather than growth shares promising big earnings down the road.

Nvidia lost 3% while Amazon and Tesla were each lower. Still, Twitter shares added another 3% to their 27% Monday gain after Elon Musk said he will join the company's board of directors a day after revealing a 9.2% stake in the social media giant.

Sectors that hold up well in a slowing economy like utilities and healthcare also moved higher on Tuesday. Drugmakers Johnson & Johnson and Pfizer rose more than 1.5% and staples like Procter & Gamble and Walmart were also higher. Meanwhile, cruise stocks like Carnival, Norwegian Cruise Line, and Royal Caribbean added 1%.

As the Russia-Ukraine war continues, investors watched Ukrainian President Volodymyr Zelenskyy for a Nuremberg-like tribunal to hold Russia accountable for alleged war crimes, during an appearance before the United Nations Security Council on Tuesday.

Oil prices gave up earlier gains on Tuesday, with West Texas Intermediate dipping 0.5% at $102.76 per barrel and Brent crude falling 0.4% to $107.10. The market has been volatile since the onset of the war amid concerns over supply disruptions.

Tuesday's moves come as investors await the release of Federal Reserve meeting minutes on Wednesday. Those minutes come from last month's meeting when the central bank hiked rates for the first time in years and indicated six more hikes were ahead this year.

Meanwhile, investors are preparing for the first-quarter corporate earnings season, which is set to begin next week.

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