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Ahead of Wall Street

Wednesday, February 22, 2017

Historic highs in the main U.S. market indexes have led to a very modest pullback in pre-market futures this Wednesday. The Dow Jones climbed past 20,000 with some resistance initially, and has now blossomed past 20,700, more than three times higher than the lows experienced just 8 years ago.

The Nasdaq, having easily swept past the 5000+ peak back in the tech bubble of 2000, looks now headed toward 6000. And the S&P 500 currently sits atop a glorious vista north of 2360 — having ramped up to all-time highs in 2013 and not looking back since.

So what can tame this beast" From this point of view, not too much. Fed minutes from the latest FOMC meeting will be released at 1pm today Chicago time, and what will be sought are indications of a more hawkish view from the Fed regarding raising interest rates sooner than later. Fed Chair Janet Yellen gave no clear indication whether the first rate hike might occur next month, in May or in June. But the cottage industry of parsing “Fed-speak” will be in full employ this afternoon, to configure the willingness of voting members to cool the market heat.

The over-under is 3 hikes in 2017; a March raise would probably bump this up a little more, whereas a pass at the Fed meeting on the 14th and 15th of next month likely would not. After all, curbed inflation and full employment is the dual mandate for the FOMC, not a gangbusters stock market.

Q4 earnings season is also winding down, with major retailers hitting the tape yesterday — including Macy’s M, Walmart WMT and Home Depot HD, none of which disappointed the market overly much — and beyond. Discount retailer TJX Companies TJX reported ahead of the open today, posting a 3-cent beat on the bottom line and a 6% improvement in quarterly sales. Later today we will see a wider range of industries represented, with earnings from Hewlett-Packard HPQ, L Brands LB and Transocean RIG after the close.

Finally, following the struck-down offer for Unilever UL from Kraft Heinz KHC last Friday has spurred the Europe-based consumer staples giant to review a “comprehensive view of options.” The proposed buyout highlighted a need for the company to examine its value from within, possibly as a signal for Kraft Heinz or some other suitor to make another offer, presumably beyond the colossal $143 billion price tag KHC had tried to put on it.

So we’re in sweep-up mode from this mid-week party. The S&P 500 is down 3 points a half-hour before the bell, the Dow down 8 and the Nasdaq -0.75 lower than Tuesday’s close.

Mark Vickery
Senior Editor

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Earnings and Economic News

Key Earnings Reports For Feb 22, 2017

Economic Event Reported
(+) Treasury bills (3 mth) - Feb 22, 2017 4:15 PM Eastern Time
(+) Federal Funds Rate - Feb 22, 2017 4:15 PM Eastern Time
(+) Treasury notes (10 yr) - Feb 22, 2017 4:15 PM Eastern Time
(+) FOMC Minutes - Feb 22, 2017 --
(+) Existing Home Sales - Feb 22, 2017 --