Day Traders Diary

6/14/22

The major averages closed mixed as the markets struggled to rebound from Monday's steep sell-off and rates surged as investors braced for further rate hikes from the Federal Reserve. The S&P 500 tumbled 14 points or 0.38%, falling further into bear market territory and more than 21% off its high. The Nasdaq Composite rose 19 points or 0.18% while the Dow Jones Industrial Average dropped 151 points, or 0.5%.

Stocks hit session lows during the final hour of trading after seesawing between sharp gains and losses throughout the session. The Dow rose as much as 170 points and its high and 370 points and session lows.

The moves in equities came as rates surged again in anticipation of more aggressive tightening policies from the Fed. The 10-year rate topped 3.45% on Tuesday and hit a new 11-year high as the 2-year jumped 14 basis points to 3.418%.

Shares of Oracle jumped more than 10% after the software company reported an earnings beat boosted by a "major increase in demand" in its infrastructure cloud business. FedEx's stock saw its best day since 1986 after soaring 14% on news that the company would up its quarterly dividend by more than 50% and add three new directors to its board.

Procter & Gamble, Coca-Cola and UnitedHealth slipped 3.1%, 2.7% and 1.7%, respectively, dragging down the Dow. Nine of 11 sectors ended the day in the red, led by utilities and consumer staples. Dow Transports jumped 2% buoyed by gains from FedEx and CH Robinson and was on pace for its best day since March.

Travel stocks slipped again with shares of Norwegian Cruise Line and Royal Caribbean down about 4%. Delta also dipped 2.5%.

Tech saw a brief rally during the trading session, led by shares of Tesla, Microsoft and Nvidia. Growth areas like technology have suffered in recent weeks as investors rotate into safe-haven sectors like consumer staples, causing the Nasdaq to fall more than 30% off its highs.

Tuesday's moves came ahead of the Federal Reserve's closely watched policy meeting which comes to a close on Wednesday. Traders now expect a more than 90% chance of a 75-basis-point rate hike, according to the CME Group's FedWatch tool that measures pricing in the fed funds futures markets.

CNBC's Steve Liesman reported Monday that the Fed will "likely" consider a 75-basis-point increase, which is greater than the 50-basis-point hike many traders had come to expect. The Wall Street Journal reported the story first.

Tuesday's market swings followed an intense sell-off that saw the S&P 500 slump 3.9% to its lowest level since March 2021 and close in bear market territory for the first time since 2020 on Monday. During that last bear market, the S&P 500 lost 33.9% before recovering, according to data compiled by S&P Dow Jones Indices. The data also showed that bear markets on average last more than 18 months.

Investors on Tuesday digested another important inflation reading of May's producer price index, which showed that wholesale prices rose 10.8% and hovered near a record pace.

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