Day Traders Diary

5/17/22

The major averages are higher on Tuesday morning as the market tried to bounce after a punishing bear market for the tech-heavy Nasdaq and a 19% pullback for the S&P 500.The Dow Jones Industrial Average is set to jump 359 points, or 1.1%. The S&P 500 is up 54 points or 1.4%, while Nasdaq is up 212 points or 1.8%.

Tuesday's bounce marks the market's latest attempt at a recovery following weeks of steep losses. The S&P 500 is coming off a six-week losing streak — its longest since 2011. The Dow, meanwhile, has fallen for seven straight weeks, marking its longest weekly slide since 2001. Year to date, the S&P 500 and Dow are down 15.9% and 11.3%, respectively.

A slew of stocks surged in Tuesday premarket trading. Citigroup shares jumped 5% in premarket trading after a filing revealed Monday evening that Warren Buffett's Berkshire Hathaway added a nearly $3 billon stake in the struggling bank in the first quarter.

Citi shares have underperformed the rest of the financial sector in the past 12 months, down nearly 40% while the Financial Select Sector SPDR Fund is off by 12% over the same period.

Other bank stocks climbed higher on the Citi news. Shares of Bank of America and JPMorgan Chase rose 1% in premarket trading.

Travel stocks popped in the premarket after United Airlines raised its revenue outlook for the second quarter on improved consumer demand. United Airlines' stock price rose 4%, Delta's jumped 3% and American Airlines' jumped 3%.

Home Depot shares rose more than 3% in the premarket after the home improvement retailer posted better-than-expected quarterly results. The company also raised its full-year outlook.

Semiconductor stocks climbed higher in premarket trading. Shares of Advanced Micro Devices jumped more than 3% following an upgrade from Piper Sandler, which said the stock looked attractive after falling 34.5% this year. Nvidia's stock price rose 3%, Qualcomm's jumped 2.4% and Micron Technology's rose 2%.

Meanwhile, Walmart shares dropped more than 5% in the premarket after the retail giant reported an earnings miss because of inflation pressure. The company raised its sales outlook, but lowered its profit forecast.

Investors will also be monitoring comments from Federal Reserve Chairman Jerome Powell who will speak on the central bank's plans to address inflation at a Wall Street Journal conference at 2 p.m. ET.

On the economic front, retail sales numbers came in about as expected. Consumer spending on retail rose 0.9% in April, according to the U.S. Census Bureau. They rose 0.4% excluding spending on autos.

Inflation concerns have been a mounting headwind for stocks, with some investors worried the economy could ultimately tip into a recession.

Traders are coming off a choppy session that ended with the S&P 500 and Nasdaq Composite losing 0.4% and 1.2%, respectively. The Dow, meanwhile, eked out a small gain Monday.

The tailwinds of the pandemic — a jump in stay-at-home spending and low interest rates — have since turned to headwinds. Now, consumer spending is shifting and rates are rising.