Dow falls for sixth straight day after another wild session

The Dow Jones Industrial Average fell for the sixth day in a row on Thursday as traders once again failed to find their footing in an increasingly volatile market.

The 30-stock Dow Jones fell 103.81 points to 31,370.30, or 0.33%. The S&P 500 fell 0.13% to 3,930.08. The tech-heavy Nasdaq Composite made a small gain, closing up 0.06% at 11,370.96. All three major averages were on track for weekly losses.

Earlier in the day, the market attempted to rally as traders bought hit names. At one point, the Dow was up as much as 80 points from session highs, while the Nasdaq added 1.61%. At session lows, the Dow Jones fell more than 500 points, while the Nasdaq fell 2.25%.

The S&P 500 hit a new low for 2022, closing down more than 18% from its 52-week high and approaching bear market territory.

“Even if you say we’re in a bear market, there are rallies within bear markets that can be very sharp,” Truist’s Keith Lerner said of early market moves. “I think, at least in the short term, and given how oversold we are and given that we’re starting to see people nibble on some of these areas that have been hit the hardest, I think that’s at least one silver lining in a sea of red and darkness in the last days.

Of the major averages, the Nasdaq is the only one in bear market territory, having fallen about 30% from its all-time high, as tech stocks continue to take a beating.

“It is my opinion that this is a market that is traded on emotion and not rational logic,” Jim Lebenthal of Cerity Partners told CNBC’s “Halftime Report” on Thursday. “Every day, for the last few days, you get this burst in the morning and then it drains away.”

Some very short names led the market’s brief rally attempt earlier in the day and closed higher. Lucid shares were up 13.2%, while GameStop and AMC were up more than 10% and 8%. Rivian Automotive also soared nearly 18% after reporting its latest quarterly results. Carvana, which hit a low of two years earlier in the session, ended the day almost 25% higher.

While it was unclear what was driving gains for Lucid, GameStop and AMC, it could mean a short contraction was underway, with hedge funds that benefited from heavy losses in overvalued pandemic winners this year eventually closing their positions. short buying return the shares.

Short selling is a tactic in which funds sell shares that are borrowed from investment banks and therefore, in order to close the trade, they need to buy the shares and return them. A short adjustment is a rally that results from that purchase.

This trading action could indicate that some investors who have placed heavy bets on the stocks of battered memes are upping the ante in hopes of winning big, said Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research.

“I think it’s a desperate move, it’s a gambling move, it’s a lottery ticket expecting a big payout and they may get lucky, but most likely they won’t,” he said.

Apple lost 2.7%, sending the stock into bear market territory and down 22% from a 52-week high. The company’s recent downdraft has seen Saudi Aramco become the world’s most valuable company. Meanwhile, shares of Amazon and Meta Platforms closed up more than 1%.

Disney shares fell to a two-year low but closed down about 0.9%. The media giant reported higher-than-expected streaming subscriber growth but warned of the impact of Covid on parks in Asia.

These moves came as traders pored over the latest US inflation data. The new data for the Producer Price Index, which measures wholesale prices, rose 11% year over year.

On Wednesday, the US government released the latest reading of the consumer price index, which showed a year-over-year jump of 8.3% in April. That’s higher than economists expected and close to a 40-year high of 8.5%.

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