Day Traders Diary

9/13/22

Stocks fell sharply on Tuesday after a key August inflation report came in hotter than expected, hurting investor optimism for cooling prices and a less aggressive Federal Reserve.

The Dow Jones Industrial Average slid 1,276 points, or 3.9%. The S&P 500 dropped about 4.3%, and the Nasdaq Composite sank more than 5%. More than 490 stocks in the S&P 500 fell, with Facebook-parent Meta dropping 8% and Caesars Entertainment losing 7.3%.

The drop erased nearly all of the recent rally for stocks, pulling the S&P 500 back toward its Sept. 6 close of 3,908 and causing some traders to glance back at mid-June, when the index fell below 3,700.

The August consumer price index report showed a higher-than-expected reading for inflation. Headline inflation rose 0.1% month over month, even with falling gas prices. Core inflation rose 0.6% month over month. On a year-over-year basis, inflation was 8.3%.

Economists surveyed by Dow Jones had been expecting a decline of 0.1% for overall inflation, with a rise of 0.3% for core inflation.

The report is one of the last the Fed will see ahead of their Sept. 20-21 meeting, where the central bank is expected to deliver their third consecutive 0.75 percentage point interest rate hike to tamp down inflation. The unexpectedly high August report could lead the Fed to continue its aggressive hikes longer than some investors anticipated.

The moves comes after four straight positive sessions for U.S. stocks, which were bolstered in part by the belief of many investors that inflation had already peaked.

The sell-off was particularly painful in high-growth tech stocks. Cloudflare fell more than 9%, while Unity Software sank 12%. Shares of direct-to-consumer auto retailer Carvana slid more 13%, making it one of the worst performers on the New York Stock Exchange.

The three major averages are now on track for their worst day of 2022 as the market rout has deepened in the final hour. The Nasdaq Composite dropped more than 5%, the S&P 500 fell more than 4%, and the Dow has shed more than 1,200 points.

Twitter shareholders voted in favor of Elon Musk's $44 billion bid to snap up the social media company and take it private.

The vote arrives as the billionaire seeks to back out of the deal. Musk has called into question the number of fake accounts on the platform claiming that the number of these phony accounts is higher than what Twitter has disclosed. Meanwhile, the social media company has stuck to its calculation that less than 5% of monetizable daily active users are fake or spam.

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