Day Traders Diary

1/18/23

The major averages tumbled once again with the Dow Jones Industrial average falling 613 points following disappointing December retail sales reading raised concerns about a recession. The S&P 500 lost 62 points or 1.56% to close at 3,928, its lowest level since Dec. 15. The Nasdaq Composite slid 1.24% or 138 points to end at 10,957, snapping a seven-day win streak.

"We've had such a strong start to the year, but now we're amid a tense earnings season, recently got weaker data — retail sales and yesterday's Empire State Manufacturing Survey. Plus the Fed meeting on Feb. 1st is looming large," said Yung-Yu Ma, chief investment strategist for BMO Wealth Management. "There's not a whole lot of reason to get aggressive here, but all of those factors above suggest that caution is warranted in the near term."

JPMorgan, Bank of America and Wells Fargo fell as the 10-year U.S. Treasury yield slid to its lowest level since September. Shares of regional banks like Zions and Fifth Third posted bigger losses.

Elsewhere, Microsoft announced plans to lay off about 10,000 employees, which hurt investor sentiment. The stock fell, contributing to the Dow's decline.

In economic data, investors digested the latest retail sales numbers, which showed a drop of 1.1% in December, slightly more than the 1% forecast. The report suggested consumers are slowing their spending, with department stores reporting a 6.6% decline and online sales dropping 1.1%.

Investors also weighed the latest reading on the producer price index, which measures input costs from companies. The PPI showed a 0.5% decline for December. Economists surveyed by Dow Jones expected a 0.1% decline.

Investors had been enjoying strong upward momentum for stocks since the start of the year, although many had begun to doubt the market's strength even before Wednesday's slide. The Dow is still higher by 0.45% for the month, while the S&P and Nasdaq are still up by 2.33% and 4.69%, respectively.