Day Traders Diary

9/21/22

The major averages fell in volatile trading Wednesday after the Federal Reserve raised rates by three-quarters of a point and forecast more sizable rate hikes in its fight against inflation, actions widely expected by traders. The Dow Jones Industrial Average finished down 522 points or 1.7% after rising over 300 points by midday. The S&P 500 fell 66 points or 1.7%. The Nasdaq Composite traded down 204 points or 1.79%.

With the S&P 500 down more than 8% in the past month and 18% for 2022 heading into Wednesday's Fed actions, stocks were already pricing in an aggressive tightening campaign by the Fed that could push the economy into a recession.

The Fed raised rates by the widely expected 75 basis points and said it expects its so-called terminal rate to reach 4.6% to fight persistently high U.S. inflation. That's the rate at which the central bank will end its tightening regime. The central bank also indicated that it plans to stay aggressive, hiking rates to 4.4% by next year.

Treasury yields popped on the news. The 2-year rate, which hit its highest level since 2007, last traded at around 4.1%. The 10-year rate jumped to about 3.6%.

All major S&P 500 sectors finished the session in negative territory, led to the downside by consumer discretionary, communication services and growth-focused companies. Travel and entertainment stocks also took a hit along with beaten-up big technology stocks Apple, Amazon and Meta Platforms.

Travel and entertainment companies lead biggest decliners in S&P 500

Eighteen of the 20 stocks that slid the most in the S&P 500 were companies in the entertainment and travel industries — sectors that get hit hardest during an economic downturn.

Hotel-and-casino giant Caesars led the pack, down about 7.5%.

The companies sliding the most represented a wide swath of sub-industries, including:

Hotels and resorts (Hilton, Marriott, Wynn, Host Hotels & Resorts, Las Vegas Sands)

Live events (Live Nation)

Casinos (MGM)

Online travel booking services (Expedia, Booking Holdings)

Cruise lines (Carnival, Royal Caribbean)

Entertainment brands (Warner Bros. Discovery, Paramount, Fox)

Airlines (United, Delta)

Mining company Freeport-McMoRan and health tech company Catalent were the only companies in the top 20 decliners not within the entertainment and travel industries.

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