Day Traders Diary

5/10/23

The major averages closed mixed as Nasdaq Composite moved higher while tamer-than-feared inflation data helped lift the averages initially on the open. The Dow Jones Industrial Average fell 30 points while the S&P 500 rose 18 points. The Nasdaq gained 126 points or 1.2%.

April consumer prices increased 4.9% from a year ago, which was less than the 5% annual increase expected by economists polled by Dow Jones. Month-over-month inflation matched expectations with a 0.4% increase in April.

Treasury yields tumbled following the report, further supporting a stock market which has been worried about higher rates snuffing out economic growth. The yield on 2-Year Treasury fell 12 basis points to 3.899%, while 10-year declined 8 basis points.

Overall market gains were contained as cyclical stocks, which are most closely linked to the economy, traded lower. Shares like Nike and Caterpillar were in the red as some investors reasoned that inflation was slowing because a recession is imminent or the country was already in one.

Airbnb and Twilio fell 11.5% and 16%, respectively, on weak forecasts. Electric vehicle maker Rivian popped 9% on a narrower-than-expected loss. Earnings season continues Wednesday with results from Disney and Robinhood.

But despite the latest sign of inflation increasing at a lower month-over-month clip in April, Wall Street is seemingly cautious on sparking a full-blown rally.

Wall Street also monitored the latest updates on the U.S. debt ceiling as worries mount that an agreement may not be reached before June 1, which is the earliest date the Treasury Department says the U.S. could default. President Joe Biden held a key meeting with congressional leaders after the bell Tuesday, but comments from leadership on both sides of the aisle suggested that little progress was made. Biden and Congressional leaders will meet again on Friday.