Day Traders Diary

11/10/22

The major averages mounted their biggest rally since 2020 after October's reading of consumer prices raised investor hopes that inflation has peaked. The Dow Jones Industrial Average jumped 1,201 points, or 3.7%, to 33,715 for its biggest one-day gain since stocks were emerging from the depths of the pandemic bear market. The S&P 500 jumped 5.53% to 3,955 in its biggest rally since April 2020. The Nasdaq Composite surged 7.35%, also its best since April 2020.

October's consumer price index rose just 0.4% for the month and 7.7% from a year ago, its lowest annual increase since January and a slowdown from the 8.2% annual pace in the prior month. Economists were expecting increases of 0.6% and 7.9%, according to Dow Jones. Excluding volatile food and energy costs, so-called core CPI increased 0.3% for the month and 6.3% on an annual basis, also less than expected.

Treasury yields plunged after the CPI report, with the 10-year Treasury yield falling roughly 30 basis points to 3.824% as traders bet the Federal Reserve would slow its aggressive tightening campaign that's weighed on markets all year. The yield on the 2-year Treasury dropped more than 29 basis points to 4.332% (1 basis point equals 0.01%). The U.S. Dollar, another recent pressure point for stocks, tumbled to its worst day since 2009 versus a basket of other currencies.

Tech stocks that have been hardest hit by the rise in inflation and surging interest rates led the gains Thursday. Shares of Amazon were up 13%. Apple, Meta and Microsoft were each up more than 6%. Shares of Meta were up 5.4%. Tesla jumped 5.3%.

Semiconductor stocks got a boost too, with shares of Lam Research and Applied Materials each up more than 5%. KLA also popped 3.7%.

Thursday's advance rekindled the comeback rally that began in mid-October but stalled in recent weeks. The Dow touched its highest since August on Thursday and the S&P 500 rose above the 3,900 level, which has been key resistance for the market.

Average 30-year mortgage rate tumbled 60 basis points to 6.62% in latest week

Another data point for the equity market to like: The average rate on a 30-year fixed-rate mortgage plunged 60 basis points to 6.62% from 7.22% yesterday, Mortgage News Daily said. (A basis point is 0.01%, or one one-hundredth of a percent.)

That matches the record drop at the start of the Covid 19 pandemic, although the rate is still more than double what it was at the start of 2022.

Commodities rally with stock market. Commodities rallied along with the stock market Thursday.

Brent crude rose gained 0.9%. The U.S. West Texas Intermediate's crude followed at 0.6% up.

Metals were up multiple percentage points.

The big winners were palladium and platinum, up 5.7% and 5.6%, respectively.

Spot gold added 2.8%, while U.S. gold futures gained 2.5%.

Silver was up 3.1%.