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Markets Skid on Yellen Comment: "Interest Rates May Rise"

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Markets started off a bit weak and skidded during the day, as Treasury Secretary Janet Yellen said out loud what every investor already knew deep down: interest rates may be forced to rise in order to keep a strengthening economy from overheating. We have not heard this utterance from Fed Chair Jay Powell, but he succeeds Yellen in this job. Between this and proposed tax hikes on wealthy investors, the market got a little chilly today.

The Dow managed to eke out a win on the day, sliding into positive territory ahead of the closing bell: +0.06%, or 22 points. The S&P 500 was down just marginally, -0.66%, while the Nasdaq was taken down the most, -1.88%. The Russell 2000 fell 1.28% on the trading day. With Q1 earnings season all but over for the Tech space — or at least the FAANG stocks — investors see no need to bid up from these levels. Some profit-taking seems in order.

After the close, T-Mobile U.S. (TMUS - Free Report) reported better-than-expected results on both its top and bottom lines: 74 cents per share was notably head of the 55 cents in the Zacks consensus (though down from the $1.23 per share reported in the year-ago quarter) on $19.8 billion in revenues, which surpassed expectations by nearly $1 billion in the quarter. Net additions in subscriptions also beat estimates: 1.4 million versus 1.2 million anticipated.

This is another impressive quarter by one of the Big Three wireless providers, but it’s nothing new for T-Mobile. Trailing 4-quarter earnings average positive surprises of an attention-getting 177%, and the company has not missed an earnings estimate since Q3 2015. The company’s synergies with the merger between Sprint have proven better than expected. T-Mobile’s 2021 net adds have been upgraded to guidance of 4.4-4.9 million.

Activision Blizzard (ATVI - Free Report) also surpassed expectations on its top and bottom lines for its Q1: 84 cents per share beat the 69 cents in the Zacks consensus and the 58 cents reported in the year-ago quarter, while $2.07 billion in sales for the quarter outpaced the $1.75 billion estimate. Next quarter earnings were lowered, but revenues guided slightly higher. Full-year 2021 earnings and revenues have been bumped up modestly in today’s report.

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