Day Traders Diary

7/21/22

The major averages rally once again led by the Nasdaq Composite and shares of Tesla climbing following better-than-expected earnings results. The tech-heavy Nasdaq gained 161 points or 1.3%, while the S&P 500 gained 39 points or 1%. Meanwhile, the Dow Jones Industrial Average gained 161 points or 0.5% in a choppy session.

The Nasdaq is set for a gain this week, up about 4.5% for the week. Meanwhile, the Dow is nearly 1.6% higher for the week, while the S&P 500 has gained 2.8% thus far.

Investors continued to pivot into tech stocks, which have fueled this week's rally, as some strong corporate results had Wall Street on the hunt for beaten-down assets.

Consumer discretionary stocks led gains in the S&P 500, up more than 2% on the back of Tesla earnings. The stock surged 9% after the automaker reported stronger-than-expected results despite shrinking automotive gross margins. Shares are still down more than 20% this year.

Meanwhile, the dollar declined following a surprise interest rate hike Thursday from the European Central Bank, which raised rates for the first time in 11 years. The central bank increased benchmark rates by 50 basis points.

A weakening dollar could boost shares of tech companies, as several major companies in the space get a chunk of their revenues from outside of the U.S.

Despite those moves, some investors pointed to weak economic reports and greater inflationary pressures as signs that markets have yet to bottom.

The Philadelphia Fed manufacturing index registered a reading of -12.3, worse than the 1.6 estimate from the Dow Jones.

Meanwhile, initial jobless claims continued their upward trend and touched their highest level since November 2021. Initial claims climbed to 251,000 for the week of July 16, up from an adjusted 244,000 claims from the prior week, in its third straight weekly gain.

Roughly 18% of S&P 500 have reported earnings for the second quarter. Of those companies, about 71% have beaten expectations, according to FactSet.

AT&T dropped 7% after lowering its full-year free cash flow guidance. Still, the telecommunications company exceeded expectations in its second quarter.

American Airlines fell 8% after cutting back on growth plans despite reporting earnings mostly in line with expectations. Still, the company forecasted a profit in the third quarter.

United Airlines' results came in below expectations, pushing the stock down more than 9%.

Carnival dropped more than 14% after the cruise company announced that it was selling an additional $1 billion of stock.

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