Day Traders Diary

9/22/22

The major averages fell once again on Thursday following the Federal Reserve's aggressive rate hike, as investors increasingly fear the central bank will push the economy into a recession as it battles to curb rising inflation. The Dow Jones Industrial Average closed down 107 points or 0.35%. The S&P 500 closed down 31 points or 0.84% while the Nasdaq closed down 153 points or 1.37%.

All the major averages finished Thursday's session on pace to finish the week with losses. The Dow is down about 2.42%, while the S&P and Nasdaq have tumbled 2.98% and 3.33%, respectively. The S&P and Dow closed Thursday 2.5% and 0.5% off their recent closing lows.

Bond yields surged again on Thursday, with the yields on the 10-year and 2-year Treasury notes hitting fresh multiyear highs.

The Dow dropped 500 points on Wednesday as the Fed maintained its aggressive stance, enacting another 75 basis point hike and predicting bringing short-term rates as high as 4.4% by the end of 2022. Other central banks worldwide followed the Fed's lead, implementing their own sizeable hikes overnight despite potential repercussions for the economy.

Growth-oriented tech stocks and semiconductors took a leg lower on Thursday amid fears of slowing economic growth. Industrials and consumer discretionary were the worst-performing S&P 500 sectors, losing about 1.5% and 2.2%, respectively, because of their reliance on the economy.

Defensive stocks outperformed with drugmakers and consumer staples in the green on Thursday. Eli Lilly shares gained 4% after UBS upgraded the stock and said it could be developing the biggest drug ever.

Shares of Cano Health surged more than 40% in late afternoon trading following a Wall Street Journal report that Humana and other potential buyers are in talks to buy the primary-care provider.

The report, which cited sources familiar with the discussions, indicated that a deal could be reached in the weeks ahead.

Shares of FedEx rose 2.8% in afternoon trading, erasing earlier losses after the company announced its fiscal first-quarter results and detailed cost-cutting initiatives. The company, which had warned investors to expect a weak quarter earlier this month, said it planned to cut expenses by more than $2 billion during the current fiscal year.

Growing fears of a recession are hitting travel stocks hard, and that has led to a rough stretch for Caesars Entertainment.

The casino stock dropped 10% on Thursday, bringing its losses since Monday's close to nearly 20%.

Rough week for Caesars

Other gaming stocks haven't performed much better. Wynn, MGM and Penn National are among the names with outsized losses this week.

Pharmaceutical stocks were some top performers in early afternoon trading on Thursday.

Novavax — Shares of the drug maker tumbled 13.9% after JPMorgan downgraded Novavax to underweight from neutral. The bank also slashed its price target on the stock, citing dwindling demand for Covid-19 vaccines.

Eli Lilly — The pharmaceutical stock climbed 4.2% after UBS upgraded Eli Lilly to buy from neutral. UBS said that Eli Lily's new weight drug.

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