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After appearing to hedge against any potential “bad news” from the Fed this afternoon, when its latest monetary policy meeting wraps and the latest interest rate hike is announced, pre-market futures are nicely growing in positive territory this morning: the Dow is +162 points at this hour, the S&P 500 is +36 and the Nasdaq is far ahead of the field: +188 points.
There are so many moving pieces surrounding this Fed meeting, compared to the last couple — where we saw hikes of 50 basis points (bps) and 75 bps, respectively: the latter the highest move from the Fed in 28 years — that it’s tough to predict a reaction. What we may assume, despite hesitant headlines to the contrary, is that 75 bps is a lock.
Consider the Fed’s somewhat surprising move from 50 bps to 75 bps at its last meeting: after clearly telegraphing a half-point raise for a month, and within the quiet period ahead of every Fed meeting, it was leaked through the press (somehow) that 75 bps was being bandied about. So the raise we saw in June was not much of a surprise to those who were paying attention.
No such news item is out prior to the July meeting. This Jay Powell-led Fed, while not perfect, has taken pains to make sure its intentions are made clear ahead of time — the better not to roil the markets. So, along with the interest rate hike which would take Fed funds to 2.25-2.50%, the expiration of Treasury bills and mortgage-backed securities will be taking down (rather slowly) the Fed’s balance sheet. All of these moves are widely expected to continue softening inflation.
The Fed pushes pause on new monetary policy meetings until after Labor Day this year; it will have more than a month’s worth of economic data to register whether these moves are having the desired effect on inflation metrics across the economy. Based on what we’ve seen so far, there are significant changes already in the Housing market, among other places. The trick for the Fed will then be to pump the brakes without letting inflation spin out of control again.
Durable Goods Orders for June came in well above expectations: +1.9% — more than double the prior month’s +0.8% and significantly beyond the -0.4% a consensus of analysts were looking for. This is the fourth straight up-month for Durable Goods Orders, and its highest month-over-month jump since January. Wholesale Inventories came in +0.4% above estimates, which is now expected to impact tomorrow’s Q2 GDP print.
The Boeing Co. (BA - Free Report) missed on both top and bottom lines in its Q2 report this morning, with a loss of -37 cents per share well off the -8 cents in the Zacks consensus, and revenues of $16.68 billion -5.87% lower than the $17.72 billion estimate. Yet the aerospace giant seems to have righted its ship regarding new orders — not only with the 737 MAX back online, but upcoming deliveries for the 787, as well. Shares are up over +3% in the pre-market.
A big beat was delivered by healthcare insurer Humana (HUM - Free Report) this morning, with the company beating expectations by +13% on the bottom line, reporting $8.67 per share. Revenues of $23.66 billion in the quarter also surpassed estimates, by +1.16%. Humana shares are +6% year to date, but are giving up a point or more on the news in pre-market activity.
After today’s close, we have a big Q2 reporting session as well, with Meta Platforms (META - Free Report) , Qualcomm (QCOM - Free Report) , Etsy (ETSY - Free Report) and Ford (F - Free Report) reporting results, among many others. This, of course, will follow the big Fed announcement and subsequent press conference with Jay Powell afterward; look for this around 2pm ET.
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Investors Await For Key Fed FOMC Decision
After appearing to hedge against any potential “bad news” from the Fed this afternoon, when its latest monetary policy meeting wraps and the latest interest rate hike is announced, pre-market futures are nicely growing in positive territory this morning: the Dow is +162 points at this hour, the S&P 500 is +36 and the Nasdaq is far ahead of the field: +188 points.
There are so many moving pieces surrounding this Fed meeting, compared to the last couple — where we saw hikes of 50 basis points (bps) and 75 bps, respectively: the latter the highest move from the Fed in 28 years — that it’s tough to predict a reaction. What we may assume, despite hesitant headlines to the contrary, is that 75 bps is a lock.
Consider the Fed’s somewhat surprising move from 50 bps to 75 bps at its last meeting: after clearly telegraphing a half-point raise for a month, and within the quiet period ahead of every Fed meeting, it was leaked through the press (somehow) that 75 bps was being bandied about. So the raise we saw in June was not much of a surprise to those who were paying attention.
No such news item is out prior to the July meeting. This Jay Powell-led Fed, while not perfect, has taken pains to make sure its intentions are made clear ahead of time — the better not to roil the markets. So, along with the interest rate hike which would take Fed funds to 2.25-2.50%, the expiration of Treasury bills and mortgage-backed securities will be taking down (rather slowly) the Fed’s balance sheet. All of these moves are widely expected to continue softening inflation.
The Fed pushes pause on new monetary policy meetings until after Labor Day this year; it will have more than a month’s worth of economic data to register whether these moves are having the desired effect on inflation metrics across the economy. Based on what we’ve seen so far, there are significant changes already in the Housing market, among other places. The trick for the Fed will then be to pump the brakes without letting inflation spin out of control again.
Durable Goods Orders for June came in well above expectations: +1.9% — more than double the prior month’s +0.8% and significantly beyond the -0.4% a consensus of analysts were looking for. This is the fourth straight up-month for Durable Goods Orders, and its highest month-over-month jump since January. Wholesale Inventories came in +0.4% above estimates, which is now expected to impact tomorrow’s Q2 GDP print.
The Boeing Co. (BA - Free Report) missed on both top and bottom lines in its Q2 report this morning, with a loss of -37 cents per share well off the -8 cents in the Zacks consensus, and revenues of $16.68 billion -5.87% lower than the $17.72 billion estimate. Yet the aerospace giant seems to have righted its ship regarding new orders — not only with the 737 MAX back online, but upcoming deliveries for the 787, as well. Shares are up over +3% in the pre-market.
A big beat was delivered by healthcare insurer Humana (HUM - Free Report) this morning, with the company beating expectations by +13% on the bottom line, reporting $8.67 per share. Revenues of $23.66 billion in the quarter also surpassed estimates, by +1.16%. Humana shares are +6% year to date, but are giving up a point or more on the news in pre-market activity.
After today’s close, we have a big Q2 reporting session as well, with Meta Platforms (META - Free Report) , Qualcomm (QCOM - Free Report) , Etsy (ETSY - Free Report) and Ford (F - Free Report) reporting results, among many others. This, of course, will follow the big Fed announcement and subsequent press conference with Jay Powell afterward; look for this around 2pm ET.