Day Traders Diary

4/7/22

The major averages rebounded on Thursday, following back-to-back losing sessions, as investors reassessed the Federal Reserve's latest plans to tighten monetary policy and combat rising inflation. The Dow Jones Industrial Average rose 87 points, or 0.25%, after dropping as much as 300 points earlier in the session. The S&P 500 advanced 19 points or 0.45% while the Nasdaq Composite inched up 8 points after falling more than 2% on Wednesday.

Defensive names like consumer staples and health care companies led the market comeback Thursday as investors continued their search for stocks with stable earnings and dividends. Costco rallied 4%, while Pfizer popped 4.5%. Walmart, Merck, UnitedHealth Group and Procter & Gamble also traded in the green.

Constellation Brands and Lamb Weston Holdings jumped 4% and 7%, respectively, after reporting earnings.

Some of the Big Tech names also rallied in afternoon trading. Alphabet, Tesla and Meta all wiped out losses and traded higher, while Twitter stepped back earlier gains from the week. Semiconductors like Nvidia and AMD are on pace to dodge a three-day losing streak.

Shares of HP Inc surged 16% after Warren Buffett's Berkshire Hathaway disclosed a stake in the tech hardware maker.

The S&P 500 traded around 4,500 and is down marginally for the week, but only 6% off its all-time high even as markets fluctuate as investors digest the Fed news.

Thursday's moves come after the Fed released minutes from its March meeting on Wednesday, which showed that officials planned to reduce their trillions in bond holdings with a consensus amount around $95 billion. Meanwhile, policymakers indicated that one or more 50 basis-point interest rate hikes could be warranted to battle surging inflation.

The minutes from the latest FOMC meeting portray a higher level of urgency than previous communication as the Fed has circled on a commitment to run the balance sheet down faster than market participants may have expected," said Charlie Ripley, senior investment strategist at Allianz Investment Management.

Officials "generally agreed" that a maximum of $60 billion in Treasurys and $35 billion in mortgage-backed securities would be allowed to roll off, phased in over three months and likely starting in May.

The news sent the blue-chip Dow down more than 100 points Wednesday, while the S&P 500 slid 1%. The tech-heavy Nasdaq Composite dropped another 2.2%. Those losses came after comments from Fed Governor Lael Brainard pushed stock prices lower on Tuesday.

Investors on Thursday continued to monitor the Ukraine-Russia war, as Ukraine asks NATO for more weapons and the EU and U.S. weigh a ban on Russian coal. Meanwhile, the U.S. Senate passed a bill banning Russian oil and gas imports.

Crude prices, which have been volatile amid the war in Ukraine, continued their descent from the previous session on Thursday. U.S. oil fell 0.6% to $95.66 per barrel, while international Brent slid 0.7% to $100.32.

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