Day Traders Diary

6/9/22

The major averages fell sharply on Thursday ahead of a key inflation report as investors worried about the state of the U.S. economy. The Dow Jones Industrial Average fell 638 points, or 1.8%. The S&P 500 dipped 97 points or 2.3%, while the Nasdaq Composite shed 332 points or 2.6%. The market was modestly lower for most of the session before selling gained steam in the final hour.

Casino stocks were some of the worst performers in the S&P 500, with Las Vegas Sands falling 4.5% and Caesars Entertainment sliding 2.9%. Chinese tech stocks reversed recent gains and dragged on the Nasdaq, with Pinduoduo sinking more than 10.3%.

Some major tech stocks also struggled, with Meta Platforms sliding nearly 4% and Amazon dropping 2.3%. Boeing was the worst performer in the Dow, falling more than 3%.

The slide for stocks comes ahead of the May consumer price index report on Friday. Investors are looking to see if inflation has peaked or if the Federal Reserve will need to be even more aggressive to tamp down price increases.

Investors have been assessing the health of the U.S. economy in recent weeks, as the Fed has started hiking rates in an attempt to cool inflation without tipping the economy into recession.

Higher energy prices and continued supply chain disruptions have kept inflation persistently high in recent months, while some economic data has shown slowing growth in recent weeks.

Oil prices dipped slightly on Thursday, but U.S. West Texas Intermediate crude still held above $120 per barrel. Initial jobless claims rose to 229,000 last week, worse than the 210,000 expected.

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The S&P 500 is now down about 15% from its record high, but has traded sideways in recent weeks after bouncing off its recent low in May. The index has shed about 1% this week.

Andrew Slimmon, senior portfolio manager at Morgan Stanley Investment Management, said he thinks stocks will finish the year higher from here but could be in for a bumpy ride over the summer, with that May low a key area to watch.

Stocks appeared to move opposite bond yields on Thursday, which were volatile after an update from the European Central Bank. The ECB confirmed its plan to hike interest rates in July and possibly again in September. The ECB also raised its inflation projection for 2022 to 6.8%, up from 5.1% previously, and lowered its growth outlook.

Elsewhere, shares of Target were little changed after the company announced a dividend hike. The payout raise comes after a disappointing first quarter and a profit warning for the second quarter from the retail giant.

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