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Relief Rally Extends; FDX, GME Post Mixed Results

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Market indexes kept the party alight — or continued exhaling post-Fed meeting, depending on your perspective — with its third-straight trading session higher. The Dow rose 417 points, +1.23%, the Nasdaq was +178 points, +1.33%, the S&P 500 also gained +1.23% and the small-cap Russell 2000 won the day, +1.69%. It’s the best week of the year on the indeces so far this year.

We’re still basking in the 25 basis-point interest rate hike from the Fed yesterday, with no draining of the $9 trillion on the balance sheet just yet. Markets had priced in 50 basis points (bps) a month or so ago, and remained unconvinced by Fed Chair Jay Powell’s assertion that 25 bps was the way to go until yesterday, when it came to pass. Expectations are for these quarter-point hikes to continue cranking the wheel on inflation over the rest of this year and the next couple.

Earlier today, Industrial Production for the month of February came in at +0.6%, 10 bps ahead of expectations but less than half what we saw a month ago, which was +1.4%. Yet that figure represented the best read since March ’21, as the Great Reopening first got its stride. We look to have dug out of he trough in Industrial Production we’ve seen since basically last summer, when Covid variants started to make their presence felt in the U.S.

Capacity Utilization, reported in tandem with Industrial Production figures, came in a bit below expectations at 77.6%, though those expectations were for the highest levels in three years. It improved 30 bps from the downwardly revised 77.3% for January. That said, we’ve held strongly north of 75% for the past 10 consecutive months, which is a sign of facility resilience.

FedEx (FDX - Free Report) helped unofficially kick off earnings season after the closing bell, with mixed results for its fiscal Q3 on top and bottom lines: earnings of $4.59 per share missed expectations by a dime, while sales in the quarter of $23.6 billion — beating modestly the Zacks consensus, but representing near 10% growth year over year.

Volumes were in line with estimates, and guidance was favorable, but shares dipped -4% on the news before ebbing back toward flat in late trading. FedEx has missed earnings estimates 10 times in the past 5 years. Shares are down -12% from the start of the year. FedEx carried a Zacks Rank #3 (Hold) with a Value-Growth-Momentum score of A into the earnings release.

One of 2021’s favorite meme stocks, GameStop (GME - Free Report) , reported Q1 earnings Thursday afternoon as well, missing badly on the bottom line while beating on the top. A loss of -$1.86 per share came in well below the +77 cents expected — and a mile from the +$1.34 per share the company made in the year-ago quarter. Revenues of $2.25 billion topped the $2.19 billion in the Zacks consensus, but stocks are -6% on the news.

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