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Market Selling Resumes; GE, J&J Miss on Revenues

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Tuesday, January 25, 2022

Yesterday afternoon’s respite from a weeks-long sullen, bearish attitude in the market indexes came as a breath of fresh air. We hope everyone got to enjoy it, because we’re back to the paring down of portfolio gains, cutting fat without (hopefully) digging into muscle. The Dow is -250 points at the hour, while the Nasdaq is down -260; the S&P 500 has dropped -60 points from yesterday’s close.

The Federal Open Market Committee (FOMC) reconvenes today, with a two-day discussion and decision-making on monetary policy. It’s been since mid-December that the FOMC gathered, at which time they increased the taper of asset purchases and, as we later discovered when the FOMC minutes came out a couple weeks later, that draining the $9 trillion balance was also on the table.

Currently, market participants believe the Fed is going to raise rates four times in 2022, with perhaps one (or more) of these being a 50-basis-point hike instead of 25 bps. This would come only after the taper brought asset purchases to zero — on track for the end of next month (and the FOMC does not meet in February this year) — which gives us only 10 months to go from a 0.00-0.25% bank rate to potentially 1.25-1.50% by the end of the year. Any further articulation to alleviate the wall of worry this data implies may provide a boost to market indexes.

Zacks Rank #4 (Sell)-rated General Electric (GE - Free Report) missed estimates on both top and bottom lines ahead of the opening bell today. Perhaps the very epitome of the large conglomerate resembling an aircraft carrier that needs to turn around in the middle of the ocean, it’s taken years for GE to right its ship. The 82 cents per share in Q4 missed the Zacks consensus, while revenues of $20.3 billion was -4.3% below estimates. Margin shortfalls in Healthcare and Power Aviation missing expectations were two elements leading to the miss. Shares are down -5% in the pre-market.

Johnson & Johnson (JNJ - Free Report) beat estimates by a penny on its bottom line — this is a company that never, ever misses on earnings, by the way — while coming up short by -1.77% on quarterly sales to $24.8 billion (though up by more than $2 billion from a year ago). J&J has outperformed the benchmark S&P 500 so far this year, though that’s not saying much: the Big Pharma and Consumer Staples company is down nearly -5% year to date. For more on JNJ’s earnings, click here.

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