Day Traders Diary

10/13/22

The major averages staged a massive comeback Thursday, with the Dow Jones Industrial Average surging 1,500 points from peak to trough before finishing just below highs of the days, as traders shook off another hot inflation report. The Dow Jones Industrial Average rose 827 points, or 2.83%, to close at 30,038 after being down more than 500 points earlier in the day. The S&P 500 ticked up 2.60% to 3,669., breaking a six-day losing streak. The Nasdaq Composite gained 2.23% to end the day at 10,649.

The choppy session saw stocks fall to their lowest levels since 2020 following hotter-than-expected inflation data and then post a stunning rebound. The Dow regained more than 1,400 points as traders digested the September consumer price index report. The S&P 500 posted its widest trading range since March 2020.

Gains in energy and bank stocks led the reversal. Shares of Chevron gained 4.85% as oil prices spiked, and bank stocks Goldman Sachs and JPMorgan rose 3.98% and 5.56%, respectively. A reversal in big tech names such as Apple and Microsoft and a surge in semiconductors Nvidia and Qualcomm also contributed to the move higher.

Investors may be betting that the stronger-than-expected inflation report means price increases will peak soon.

Stocks fell to session lows when the September consumer inflation report showed a larger-than-expected increase. The consumer price index increased 0.4% for the month, more than the 0.3% estimate from Dow Jones. On an annual basis, inflation was up 8.2%.

Persistent high inflation could mean that the Federal Reserve is more aggressive with future interest rate hikes and keeps rates higher until price increases cool off.

The SPDR S&P Regional Banking ETF is ahead 4.5%, led by KeyCorp, Regions Financial, Fifth Third and Huntington Bancshares (all of which higher by 6.3% or more), and on course to snap a six-day slide.

Financial stocks led the S&P 500 higher Thursday, with the S&P 500 Financials Index gaining 4.14%, six basis points more than the S&P 500 Energy index's 4.08%. (A basis point is 0.01 of a percentage point).

Still, the only stock in the S&P 500 setting a 52-week high Thursday was Cigna, which also reached an all-time, dating back to its IPO in 1972.

Walgreens Boots Alliance was the top performing stock, up more than 6%. JPMorgan and Goldman Sachs both ticked up, gaining roughly 5% and 4%, respectively, while American Express rose more than 3%. Dow Chemical, Chevron, McDonald's and 3M were all top gainers as well.

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