Dow falls for sixth straight day after another wild session

Stocks fell on Thursday as the market sell-off continued after another failed rebound attempt.

The Dow Jones Industrial Average fell 250 points, or 0.8, falling for the sixth day in a row. The S&P 500 fell 0.7% to hit a new low for the year. The index was down 18.9% intraday and around 19% at the close, moving closer to bear market territory. Meanwhile, the Nasdaq Composite fell 0.7% as technology sales persisted after taking a brief breather.

All of the major averages closed the session headed for weekly losses.

Earlier in the session, the market tried 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 1.6%.

“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 it’s at least one silver lining in a sea of red and darkness in the last days”.

Those gains fell as markets once again struggled to choose a direction and the S&P 500 teetered on the brink of bear market territory. Of the major averages, the Nasdaq is the only one in bear market territory, down more than 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 brief rally from earlier in the day and continued to trade higher. Shares of Lucid were up 13.2%, while GameStop and AMC were up more than 30% and 20%, before taking profits. Rivian Automotive also soared about 18% after reporting its latest quarterly results and Carvana, which hit a low two years earlier in the session, surged nearly 25%.

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.

To be sure, this trading action could signal that some investors who have placed big bets on hit-meme stocks are upping the ante in hopes of winning big, said Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial . Investigate.

“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%, pushing the stock into bear market territory, down 22% from a 52-week high. It came as Saudi Aramco overtook the tech giant as the world’s most valuable company on Wednesday. Meanwhile, shares of Amazon and Meta Platforms closed up more than 1%.

Disney shares fell to a two-year low and closed around 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%. The report caused investors to keep selling risky assets like tech stocks.

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