Day Traders Diary

6/23/22

The major averages rally into the close as the Nasdaq Composite adds 1.6% or 180 points as bond yields slipped, and Wall Street continued to weigh recession risks. The Dow Jones Industrial Average rose 184 points or 0.61% while the S&P 500 is gaining 37 points or 0.9%.

The tech-heavy Nasdaq outpaced the other averages as market participants continued to mull over the likelihood of an economic downturn, and as the yield on the 10-year Treasury note dipped to its lowest level in roughly two weeks. Yields move inversely to prices.

A peek into the broader market index showed more defensive stocks such as consumer staples, utilities, real estate and health care stocks drove outperformance, with each sector up 1%. Consumer staples stocks such as Clorox gained 5%.

Homebuilders helped buoy consumer cyclicals, as shares of Lennar and D.R. Horton on Thursday both climbed more than 3%.

Meanwhile, energy was the worst performing sector in the S&P 500 as oil prices took a hit. Shares of Schlumberger dropped 8%. Valero Energy and Phillips 66 each fell 7%.

Airline stocks dragged down on transportation issues. Shares of United Airlines dropped 5% as it cut back on flights out of Newark by 12%. Shares of American Airlines fell 3% after dropping service to four small U.S. cities.

Federal Reserve Chair Jerome Powell on Thursday reiterated that the central bank is "strongly committed" to bringing down inflation, as he spoke on monetary policy for a second day before Congress. He also noted that a recession is a "possibility," a fear that has continued to weigh on Wall Street.

UBS raised its odds of a recession to 69%, becoming the latest investment bank to see a heightened risk of a downturn. Citigroup and Goldman Sachs also increased their recession risk expectations this week.

On the other hand, a top strategist at JPMorgan on Thursday said he believes the U.S. economy will dodge a recession altogether, with the stock market making back any losses in the back half of the year.

Stocks wavered in an attempt to rebound from recent bear market lows. Still, the major averages are set for a positive week, with the Dow up 1.7%, the S&P 500 gaining 2.4% and the Nasdaq Composite increasing 2.9% week to date.

On Thursday, the Labor Department said U.S. weekly jobless claims fell 2,000 to a seasonally adjusted 229,000 for the week ended June 18, showing the labor market remains tight.

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