Day Traders Diary

8/30/22

The major averages fell once for a third day on Tuesday, jeopardizing a summer comeback rally, as the Federal Reserve and other global central bankers continued to signal they will raise interest rates to squash inflation despite the negative consequences for economic growth and, potentially, corporate profits. The S&P 500 fell 1.1% to 3,986 falling below the 4,000 level for the first time since July. The Nasdaq Composite lost 1.1%, to close at 11,883. Meanwhile, the Dow Jones Industrial Average slid 308.12 points, or nearly 1%, to 31,790.87.

The market added to losses that began Friday, when the S&P 500 shed more than 3% in a big rout following inflation-fighting comments from Fed Chief Jerome Powell and continued to fall this week. The benchmark's comeback from its mid-June low has been cut to 8.7%.

The latest comments came from New York Fed President John Williams on Tuesday. "I do think with demand far exceeding supply, we do need to get real interest rates … above zero. We need to have somewhat restrictive policy to slow demand, and we're not there yet," Williams told the Wall Street Journal.

Short-term rates continued their march higher as investors bet on more rate hikes. The 2-year Treasury yield topped its highest in nearly 15 years.

She added that all eyes are on the Friday jobs report, but a strong number would just mean more of the same rhetoric from the Fed, in terms of its commitment to lowering inflation.

"We're at a tricky juncture, but I don't think one particular data point is going to give relief to the market," Lang said. "You're going to need to see several months of the actual inflation data continue to move down for the Fed to feel any bit of comfort."

Energy prices eased on Tuesday, with West Texas Intermediate futures, the U.S. oil benchmark, falling more than 5%. Natural gas futures also dipped.

Social media company Snap is planning to lay off 20% of its staff, according to a report from The Verge.

In July, Snap beat expectations for its second quarter, but it still reported a net loss and media companies have become increasingly worried about a slowdown in the advertising market.

Shares of the company were down 2.7% for the session.

Every sector in the S&P 500 was down on Tuesday and stocks continued their three-day sell-off. Financials trailed the other 10 sectors, down 0.2% on the day in the final hour of trading. Goldman Sachs, JPMorgan and American Express were in the green, albeit slightly.

Energy stocks continued to lead declines. The sector was last down 3.4%.

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