Day Traders Diary

11/17/22

The major averages were muted today as bond yields jumped as Federal Reserve officials signaled their rate-hiking campaign to slow inflation is far from over. The Dow Jones Industrial Average slipped 7 points to 33,546 after falling as much as 314 points in the session. The S&P 500 fell 12 points or 0.31% to 3,946. The Nasdaq Composite declined 38 points or 0.35% to 11,144.

Stocks rebounded from lows reached earlier in the day as shares of Cisco Systems

 jumped nearly 5%. The networking equipment company surpassed expectations in its fiscal first-quarter report, and issued upbeat guidance. Other tech stocks such as Apple and Intel also led gains.

Investors weighed comments from St. Louis Federal Reserve President James Bullard, who said in a speech Thursday that "the policy rate is not yet in a zone that may be considered sufficiently restrictive."

"The change in the monetary policy stance appears to have had only limited effects on observed inflation, but market pricing suggests disinflation is expected in 2023," added Bullard.

The policy-sensitive 2-year Treasury yield jumped to 4.45% Thursday, raising fears higher rates would send the economy into a recession.

Stocks vulnerable to a recession and higher rates led losses in the S&P 500. Materials stocks declined, as did consumer discretionary names. Defensive stocks such as health care outperformed.

Wolfe Research says Fed comments support the case for a 6% fed funds rate

St. Louis Federal Reserve President Bullard's comments on Thursday reinforce the view that a Fed pivot is not coming anytime soon, according to Wolfe Research's Chris Senyek. Bullard suggested that the central bank should hike the fed funds rate to a minimum of 5% to 5.25%, and maybe as high as 7%.

Information technology leads the S&P 500, semiconductor stocks rise Information technology was the top outperformer in the S&P 500 during early afternoon trading, with the sector up 0.6%. Shares of Cisco Systems rose more than 4% after reporting a beat in its most recent earnings report, and issuing upbeat guidance. Other tech stocks such as Apple

Semiconductor stocks bolstered the sector, with shares of Advanced Micro Devices up 2%. NXP Semiconductors NV was about 1.8% higher, ON Semiconductor rose 1.7%, and Lam Research climbed 1.6%.