Day Traders Diary

5/26/22

The major averages rise sharply, lifting Wall Street from a long string of weekly declines. The Dow rose over 500 points, or 1.6%. The S&P 500 climbed 80 points or 2%. The tech-heavy Nasdaq Composite gained 300 points or 2.6%, helped by a surge in Dollar Tree shares, and was the outperformer after trailing the other averages earlier in the day.

The Dow has fallen the last eight weeks, while the S&P 500 and Nasdaq are riding seven-week losing streaks. The market seems to have somewhat regained its footing this week, however, as investors hope to see a peak in inflation and seek value at these levels. The Dow has posted gains in the last four sessions.

The Dow and S&P 500 are up 4.6% and 4.1%, respectively, for the week. The Nasdaq is up 3.5%.

Some remained distrustful of the rally as stocks have been on a persistent downward trend since the start of year, despite the relief bounces sprinkled throughout. Zachary Hill, head of portfolio strategy at Horizon Investments, told CNBC it's too early to shift focus from inflation to growth.

Stocks pushed higher after strong earnings from the retail sector gave a boost to investor sentiment, which was bruised by disappointing results from big-box retailers last week. Macy's shares surged 15% after the company raised its 2022 profit outlook, and Williams-Sonoma rose 12% after beating estimates on the top and bottom lines.

Discount retailer Dollar Tree jumped 20% after posting an earnings beat and helped push the Nasdaq higher. Dollar General also reported strong earnings, adding 14% to its shares. The SPDR S&P Retail ETF gained 5.2%. Investors are looking forward to Costco's quarterly results, which it will report after the bell.

Shares of chipmaker Nvidia bounced after falling on weaker-than-expected guidance for the second quarter and a warning of a slowdown in hiring. Shares reversed and climbed 5.7% after a slew of analysts reiterated their buy ratings on the shares and highlighted momentum in the company's data center business.

Elsewhere, Twitter shares jumped more than 4% after Elon Musk increased his commitment in his takeover bid to $33.5 billion, which analysts have said indicates a new seriousness and increased probability that he'll complete the deal.

On the flipside, software stock Snowflake pared steeper losses but was down 2% after the company's guidance for operating margin came in narrower than expected.

First-quarter gross domestic product declined at a 1.5% annual pace, worse than the 1.3% Dow Jones estimate and a write down from the initially reported 1.4%, the Commerce Department reported Thursday.

Initial jobless claims for the week ending May 14 totaled 218,000, which was an increase from the previous period and slightly higher than the 215,000 estimate.

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