Day Traders Diary

8/29/22

The major averages slipped into the close, but off the morning lows as traders fought to regain their footing amid increasing concerns over rising rates and tighter U.S. monetary policy. The Dow Jones Industrial Average fell 183 points briefly turned positive for the session after falling roughly 300 points earlier in the day. The S&P 500 fell 26 points while the Nasdaq Composite declined 124 points or 1%.

Tech was the worst-performing S&P 500 sector as rates rose, while energy and utilities outperformed. 3M and Salesforce were the biggest laggards in the 30-stock Dow Industrials; those losses were mitigated by more than 1% advances from Walmart and Chevron.

Monday's moves came after Wall Street suffered a sharp sell-off on Friday, when Federal Reserve Chairman Jerome Powell's short and blunt remarks in Jackson Hole, Wyoming, appeared to extinguish hopes of the central bank changing its aggressive course of rate hikes in the months ahead.

The Dow fell 1,008 points, or just over 3%, for its worst day since May. The S&P 500 and Nasdaq Composite fell 3.4% and 3.9%, respectively, for their worst days since June. The drop erased the August gains for all three averages.

Investors are looking ahead to more Fed speeches this week before August's nonfarm payrolls report on Friday.

Minneapolis Fed President Neel Kashkari told Bloomberg News that he is "happy" the stock market declined sharply on Friday after Jerome Powell's Jackson Hole remarks.

Kashkari said investors had not been fully appreciating the Fed's plan to fight inflation, pointing to the market's rally after the central bank's July rate hike.

"I certainly was not excited to see the stock market rallying after our last Federal Open Market Committee meeting, because I know how committed we all are to getting inflation down," Kashkari said. "And I somehow think the markets were misunderstanding that."

Kashkari, who is not currently a FOMC voting member, was known as one of the more dovish Fed presidents before the current rate hiking cycle.

Consumer discretionary has outperformed the broader S&P 500 this quarter even as the Federal Reserve continues its aggressive rate hiking campaign.

The sector is up nearly 16% since the start of the period — lagging only energy — and on pace for its biggest quarterly gain since the second quarter of 2020.

Against this backdrop, CNBC Pro screened for some of the most loved stocks in the sector positioned to rally in the near-term based on their consensus price target. The search brought up a slew of retail, travel and technology names outperforming since the start of July.

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