Day Traders Diary

5/23/22

The major averages rallied to start the week as investors snapped up beaten-down shares such as banks after the Dow Jones Industrial Average notched eight straight losing weeks. The blue chip index jumped 601 points, or 1.9%. The S&P 500 advanced 1.7%, cutting its losses after falling into bear market territory at one point on Friday, down more than 20% from its record. The Nasdaq Composite rose 1.3%.

It remains to be seen how long the three indexes can hold these levels, analysts said. Investors have been here before, welcoming small relief rallies during this year's turmoil but wondering when the rebound will be strong enough to reverse the months-long downtrend.

JPMorgan rose 6% after the bank said it expects to reach key return targets sooner than planned thanks to rising rates giving its lending business a boost. Citi and Bank of America also got a 6% boost, as the benchmark 10-year Treasury yield rebounded from last week, rising about 7 basis points. Wells Fargo added more than 5%.

Ross Stores and TJX were also in the top gainers Monday, up 9% and 4%, respectively, coming off a busy few days of earnings for retailers. Others in the sector, including Costco, Dollar General, Nordstrom and Macy's, are scheduled to report their results this week. That'll be a key focal point for investors, who are eager to see if high-level demand remains robust and whether some of last week's weakness was company-specific, Mayfield said.

Shares of VMWare jumped more than 20% after Bloomberg News and Reuters reported that chipmaker Broadcom is in talks to acquire the cloud services company, citing sources. Broadcom shares fell 3%.

Electronic Arts shares rose about 2% following a report that the video game maker is actively seeking a sale or merger.

Sentiment appeared to have gotten a boost after President Joe Biden said he was considering reducing tariffs on some products imported from China. "I am considering it," Biden said. "We did not impose any of those tariffs. They were imposed by the last administration and they're under consideration."

Investors have been looking for signs of a bottom as the market 2022 sell-off in stocks approaches its sixth month. Oppenheimer's chief investment strategist, John Stoltzfus, noted that nasty sell-offs aren't uncommon in times of Federal Reserve tightening, and that the market appears "way over sold" with big declines hitting even stocks with strong cash flow and profitability.

The S&P 500 currently sits about 17% off its record high, while the Dow is down about 14%. The Nasdaq is already deep in bear market territory, down 29% from its high.

The end of last Friday's session marked the Dow's first eight-week losing streak since 1923. The S&P 500 also capped seven consecutive weeks of losses, its worst since 2001.

The Nasdaq saw its seventh negative week in a row for the first time since March 2001. The tech-heavy index also saw its lowest intraday level since November 2020 on Friday.

In addition to this week's retail earnings, investors are looking ahead to Zoom Video, which is set to report results Monday after the close. Nvidia results are also on deck this week.

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.