Day Traders Diary

5/27/22

The major averages rose sharply to end the day, track to close their best weeks since November 2020.

The Dow jumped 575 points, or 1.8%, to 33,212. The S&P 500 rose 2.8% to 4,158. The tech-heavy Nasdaq Composite was the outperformer, rising 390 points or 3.33% helped by strong earnings from software companies and a fall in the 10-year Treasury yield.

All three of the major averages closed the week higher. The Dow finished up 6.2% for the week and snapped its longest losing streak, eight weeks, since 1923. The S&P 500 is 5.6% higher and the Nasdaq is up 6.2% on the week. Both are riding seven-week losing streaks. A chunk of the week's gains came Thursday and Friday, when all three of the averages rallied as strong retail earnings and a slowing inflation report lifted sentiment.

A report showing inflation slowing a bit helped give stocks a boost on Friday. The core personal consumption expenditures price index rose 4.9% in April, down from the 5.2% pace seen the previous month. This particular report is watched closely by the Federal Reserve when setting policy.

Investors on Friday also continued to parse through retail earnings. Ulta Beauty shares were up 12.5% after the company reported better-than-expected quarterly results, while Gap added 4.3% despite slashing its profit guidance.

Tech stocks were among the top gainers Wednesday. Software company Autodesk rose 10% after reporting strong earnings for its most recent quarter. Dell Technologies jumped 12% on earnings and chipmaker Marvell advanced 6%. Crowdstrike and Datadog were also higher Friday, up more than 6% and 8%, respectively.

The moves came as investors assessed the sustainability of this week's rally, and whether it's a relief bounce or the bottom of this year's long sell-off is in

Still, the averages are well off their highs, with the Nasdaq Composite solidly in bear market territory and the S&P 500 having briefly dipped more than 20% below its record last week.

The Nasdaq is now sits about 23% from its record, while the S&P 500 and Dow are off by 13% and 9%, respectively.

Jeff Kilburg, chief investment office of Sanctuary Wealth, said he looks to the Treasury market as a "beacon of light" for the stock market. The 10-year Treasury yield has fallen below 2.75% from a peak of around 3.25% this year.

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