Day Traders Diary

6/8/22

The major averages pulled back on Wednesday as investors monitored signs of a potential economic slowdown and kept an eye on the bond market. The Dow Jones Industrial Average shed 269 points, or 0.8%. The S&P 500 slid 44 points or 1.09% while Nasdaq Composite ticked down 88 points or 0.7%.

The moves came as investors weighed updates from major companies and signs that economic growth may be slowing.

The U.S.-traded shares of Credit Suisse fell more than 1% after the bank issued a profit warning for the second quarter, citing tighter monetary policy and the war in Ukraine. Intel dropped more than 5% after management warned of weakening demand for semiconductors at an industry conference.

Meanwhile, the Atlanta Federal Reserve's GDPNow tracker now shows a growth rate of just 0.9% for the second quarter, down from 1.3% last week. Mortgage demand hit its lowest level in 22 years last week, according to the Mortgage Bankers Association.

Deutsche Bank chief U.S. economist Matthew Luzzetti, who previous called for a recession by the end of 2023, said in a note to clients on Wednesday that the odds for a recession are likely to rise in the coming months.

As the Fed continues to tighten monetary conditions, the concerns about economic growth and corporate earnings could have a bigger impact on stocks, Allianz chief economic advisor Mohamed El-Erian said on "Squawk Box."

Action in the bond market may have hurt investor sentiment on Wednesday, as the 10-year Treasury yield jumped back above 3%. The price of oil also rose, with U.S. benchmark West Texas Intermediate crude pushing well above $120 per barrel.

Elsewhere, shares of Robinhood fell more than 4% after Securities and Exchange Commission Chair Gary Gensler detailed potential rule changes around trade execution, such as possibly requiring retail orders to routed into auctions. Moderna rose 2.3% after its modified Covid-19 booster shot showed a stronger response to new variants.

On the earnings front, Campbell Soup moved higher by about 2.3% after a stronger-than-expected quarterly report.

Investors are looking toward Friday's consumer price index reading for May. Many believe the print will be crucial for the path of Fed policy and whether the central bank will keep raising rates in half-point increments.

The stock market has had a roller-coaster year as the Fed's aggressive rate hikes stoked recession fears. The S&P 500 is off about 14% from its all-time high reached in January. The equity benchmark briefly dipped into bear market territory on an intraday basis last month. The tech-heavy Nasdaq, meanwhile, is down roughly 25% from its record high.

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