Day Traders Diary

1/19/23

The major averages fell once again for a third straight day as investors grew increasingly concerned the Federal Reserve will keep raising rates despite signs of slowing inflation. The Dow Jones Industrial Average lost 252 points, or 0.6%, to 33,227, giving up its gains from the new year rally. The S&P 500 fell 30 points or 0.76% to 3,898. The Nasdaq Composite shed 104 points or 0.96% to end at 10,932. The S&P 500 and Nasdaq are still positive for the month.

All of the major averages are on pace for a negative week. The Dow is down 3.66%, while the S&P and Nasdaq have each lost more than 2% on a weekly basis.

"After the market practically grazed our near-term SPX fair value estimate intraday [4014 both Tuesday and Wednesday] stocks slid and acted like they needed a breather," said Christopher Harvey, Wells Fargo Securities head of equity strategy. "The factors driving the sharp YTD rally (short covering, risk bid and lower yields) appear to be hitting their near term bounds. This will likely will cause the market to trade sideways-to-down over the short term."

Stocks extended their slide on Thursday after initial filings for unemployment insurance fell to their lowest level since late June last week, the Labor Department reported, signaling to investors that the labor market is resilient amid a slowing economy.

"Despite all the big-tech post-pandemic layoffs, the jobs market remains hot," said Ed Moya, senior market analyst with currency data and trading firm Oanda. "The labor market needs to break to allow the Fed to comfortably keep rates on hold."

Claims totaled a seasonally adjusted 190,000 for the week ending Jan. 14, a decline of 15,000 from the previous period. Economists surveyed by Dow Jones had been looking for 215,000.

Investors have been parsing other recent economic data and Fed remarks for clues on how high rates will go. But, while recent numbers point to easing inflation, JPMorgan Chase CEO Jamie Dimon thinks rates will top 5%.

"I think there's a lot of underlying inflation, which won't go away so quick," Dimon told CNBC's "Squawk Box" from the World Economic Forum in Davos, Switzerland.

After hours, Netflix is jumping 5% on earnings. Earnings actually missed, sales were inline, but net subscribers grew by 7.66 million verse 4.57 million estimates.