Day Traders Diary

7/19/22

The major averages build on their gains through the day as the market resuming a bounce from last month's lows, as traders bet on strong corporate earnings reports, and wagered that markets have found a bottom. The Dow Jones Industrial Average jumped 754 points, or 2.42%, closing near the highs of the session as gains accelerated in the final hour of trading. The S&P 500 gained 105 points or 2.75%, while the Nasdaq Composite rose 353 points or 3.1%.

All three major averages are above their 50-day moving averages for the first time since April. The broader market index is now 8% off its June lows.

Investors are betting that stocks have reached a bottom after their steep declines this year, and as the latest round of earnings reports showed businesses are working through economic pressures better than feared in the second quarter.

Meanwhile, stocks absorbed a weaker-than-expected print in U.S. housing starts, which fell 2% in June to a seasonally adjusted annual rate of 1.559 million units.

All sectors in the S&P 500 were higher Tuesday. Communication services and industrials led the gains, rising more than 3%.

Solid earnings reports boosted the shares of many companies, even as a stronger dollar weighed on the results of others.

Bank stocks outperformed with shares of Truist Financial and Citizens Financial Group each jumping more than 2% on the back of strong results. Goldman Sachs rose 5.6%. Bank of America and Wells Fargo advanced 3.4% and 4.2%, respectively.

Shares of Halliburton climbed 2.1% as sharply rising oil prices this year helped lift profits for the oilfield services company in its most recent quarter.

Hasbro reported earnings per share that beat analyst expectations, though the toymaker's revenue for the previous quarter came in a tad below expectations, according to consensus estimates from Refinitiv.

Meanwhile, shares of IBM fell more than 6% after the tech company lowered its forecast for cash flow, with IBM finance chief Jim Kavanaugh citing the U.S. dollar and a suspension of business in Russia. Still, the company reported results that beat Wall Street's earnings and revenue estimates.

Johnson & Johnson shares declined 1% after the pharmaceutical giant blamed a stronger dollar while cutting its full-year revenue and profit guidance. The company reported better-than-expected top and bottom line results.

As of Tuesday morning, roughly 9% of S&P 500 companies have reported calendar second-quarter earnings. Of those, about two-thirds have beaten analyst expectations, FactSet data shows.

Shares of Netflix popped 4% ahead of the streaming company's earnings report scheduled for after the close. Later in the week, Tesla, United Airlines, American Airlines, Snap, Twitter and Verizon are among those scheduled to report.