Day Traders Diary

12/13/22

The major averages rose once again after the release of new U.S. inflation data, while traders awaited a key Federal Reserve policy decision. The Dow rose 123 points, or 0.36%, after surging more than 700 points earlier in the day. The S&P 500 added 29 points or 0.81%, while the Nasdaq Composite rose 113 points or 1.08%. At session highs, the S&P 500 was up 2.77%, while the Nasdaq advanced 3.84%.

Stocks initially rallied after the consumer price index showed an increase of just 0.1% from the previous month, and a gain of 7.1% from a year ago, the Labor Department reported Tuesday. Economists surveyed by Dow Jones had been expecting a 0.3% monthly increase and a 7.3% 12-month increase. Excluding volatile food and energy prices, so-called core CPI rose 0.2% on the month and 6% on an annual basis, compared to respective estimates of 0.3% and 6.1%.

However, major indexes came off their best levels as the day continued.

Investors are anticipating the Federal Reserve's next rate-hiking decision at the conclusion of its two-day policy meeting on Wednesday. Traders are largely pricing in a 50-basis point increase, a slight decline from the previous four hikes. (1 basis point equals 0.01%.)

"While the inputs of inflation coming into that Fed meeting are modestly better, we still don't know for sure if the Fed's going to raise by 50 basis points, if they're going to raise their terminal rate. So, we have quickly shifted gears into a mode of 'wait and see' for the Fed meeting tomorrow," said Art Hogan, chief market strategist at B. Riley Wealth.

The 10-year Treasury yield dropped about 10 basis points after the CPI report, breaking below 3.5% earlier in the session. Energy stocks led the gains, with shares of Chevron the leading outperformer in the Dow.

Tech stocks that have been hit the hardest from rising inflation and rates in 2022, also rose. Shares of Meta and Google-parent Alphabet were up more than 4% and 2%, respectively.

Moderna, the drugmaker saw its stock soar more than 22% after the company issued promising data about its cancer treatment. Moderna announced that its experimental melanoma vaccine combined with Merck cancer treatment Keytruda cut the risk of skin cancer recurrence or death by 44%, compared with a treatment of only Keytruda.

Pfizer, the Covid vaccine maker gained 1% after Goldman Sachs upgraded the stock to buy from neutral, saying progress in other areas make the firm confident the stock will perform even as the need for its pandemic-related offerings decreases.

Oracle, shares of the software company slipped more than 1%. Late Monday, the firm reported better-than-expected results in its fiscal second quarter as cloud infrastructure revenue jumped. But Oracle did issue a lighter earnings forecast than analysts had predicted.

United Airlines, the airline stock shed 6% following news that it's purchasing at least 100 Boeing 787 Dreamliners to replace its less fuel-efficient planes. The aircrafts are slated for delivery between 2024 and 2032. Boeing shares gained more than 1% on the news.