Day Traders Diary

8/23/22

The major averages fell for a third day following the worst day since June as investors braced for a hawkish message from the Federal Reserve. The Dow Jones Industrial Average dropped 154 points, or 0.47%. The S&P 500 fell 9 points or 0.22% while the Nasdaq Composite dipped just 27 cents. Both the Dow and the S&P 500 declined for a third straight session.

Real estate, health care and communication services were the worst performers in the S&P 500. Meanwhile, energy was the biggest winner in the broader market index, up 3.6% on the back of rising oil prices.

Zoom Video shares slumped 16.5% after the video conferencing company lowered its full-year forecast.

Traders are coming off a downbeat session, as a summer rally fizzled out amid mounting rate hike concerns, and as the 10-year Treasury yield climbed above 3%.

The Dow dropped more than 600 points Monday, while the S&P 500 and Nasdaq Composite fell more than 2% each. Those were the biggest one-day drops for the Dow and S&P 500 since June 16. The Nasdaq suffered its worst session since June 28.

"This bear in our view has one last act," read a note from Lisa Shalett, head of the global investment committee at Morgan Stanley Wealth Management.

Shalett said investors are underestimating inflation, growing recession risks, and earnings expectations that will have to come down at some point.

Stocks will remain volatile as Wall Street anticipates the Federal Reserve's next move, according to UBS.

"We expect equity markets to remain volatile as investor sentiment oscillates between hopes that the Fed will succeed in steering the US economy to a 'soft landing,' and fears that it will not," read a Tuesday note from Global Wealth Management Chief Investment Officer Mark Haefele.

The firm recommended investors continue to take a "selective approach" to equities and build resilient portfolios. Investors can add exposure to more defensive sectors such as healthcare, tilt toward value over growth, and position for longer-term trends.

Some long-term trends investors can explore are in green tech, cybersecurity and agriculture.

All comments contained herein are for informational purposes only, and should not be considered as a solicitation to buy or sell any security. The firm does not guarantee the accuracy or completeness of the information or make any warranties regarding results from it's usage.