Day Traders Diary

2/9/23

The major averages gave up early advances as concerns over the Federal Reserve future moves on monetary policy offset excitement around the latest batch of corporate earnings. The Dow Jones Industrial Average lost 248 points, or 0.7% after rising over 200 points on the open. The S&P 500 slid 36 points or 0.9%, while the Nasdaq Composite dropped 120 points or 1% after rising over 1% in the morning.

The three indexes notched session lows in the final hour of trading. By comparison, the Dow advanced more than 300 points, while the S&P 500 and Nasdaq Composite were up 0.9% and 1.4%, respectively, at session highs.

"Wall Street couldn't keep the upbeat mood," said Ed Moya, senior market analyst at Oanda. "Some traders placed bets that the Fed will have to do a lot more tightening than what Wall Street is pricing in."

Google-parent Alphabet slid more than 4% as investors grew concerned around rising competition in the artificial intelligence space. A 3% decline in Meta also dragged on the technology-heavy Nasdaq Composite. Investors recently have been monitoring the Fed's commentary as they search for clues on future policy moves following last week's interest rate hike of 25 basis points. On Tuesday, Fed Chair Jerome Powell said that inflation was cooling but there was still a long way to go.

At the same time, Wall Street is in the middle of earnings season, with investors watching for insight on how companies have fared amid high inflation and how how they expect to perform going forward. Investors initially began the day bidding prices higher after positive earnings from consumer bellwethers Walt Disney

 and PepsiCo and Disney shares closed more than 1% lower after initially popping following smaller-than-expected subscriber losses at its streaming service along with earnings and revenue that beat analyst estimates. CEO Bob Iger said Thursday on CNBC's "Squawk on the Street" that he was only expecting to stay in the role for two years, while activist investor Nelson Peltz said he was ending a proxy battle after the company unveiled a restructuring plan that included 7,000 layoffs and a reorganization of its divisions.

Wall Street has considered this earnings season lackluster. Nearly 70% of the approximately two-thirds of S&P 500 companies that have reported earnings so far have beaten analyst expectations, FactSet data shows. That beat rate is below a three-year average of 79%, according to data from The Earnings Scout.