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Fed Moves 75bps, Market Applauds; Plus Earnings for META, QCOM and F
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In a unanimous decision at the latest meeting of the Federal Open Market Committee (FOMC), it was decided that the Fed funds rate would be raised another 75 basis points (bps), as widely expected. This brings the rate to 2.25-2.50%, up 225 bps in less than five months. Fed Chair Jay Powell said the FOMC was “moving expeditiously” to bring inflation down, including that “ongoing rate hikes [are] appropriate.”
Market participants rejoiced, even though we expect to continue to see higher loan rates going forward. For one thing, the Fed keeping the foot on the gas infers that the economy is still strong. It also takes out a key question mark, and everyone knows the market hates uncertainty. The Dow gained 434 points on the day, +1.37%, while the S&P 500 grew 102 points, +2.61%. The Nasdaq raced ahead +469 points today, +4.06%, while the Russell 2000 gained a very respectable +2.39%.
The Fed commented that supply and demand imbalances are keeping inflation high, elevated from prices pressures. In oil & gas, this was primarily blamed on the Ukraine war, which is now five months old. The Fed will also continue its balance-sheet reduction program. The 75 bps hike was a unanimous decision in light of economic prints seen over the past several weeks.
Powell also commented that “the economy is resilient,” with labor demand remaining very strong. It appears to have been a very effective address from Powell following the Fed statement, as every sector closed Wednesday up big. What the market takeaway seems to be is the sense that Powell is projecting a mild recession to befall the economy, at worst. Investors, for the most part, can live with that.
Meta Platforms (META - Free Report) released Q2 earnings results after today’s close, with earnings of $2.46 per share missing the Zacks consensus by 5 cents per share, on $28.82 billion in quarterly sales which narrowly outperformed expectations of $28.74 billion. Daily Active Users (DAU) slightly outperformed expectations to 1.97 billion, while Monthly Active Users (MAU) dropped a bit from expectations to 2.93 billion users.
The biggest reason Meta shares dropped -6% on the initial news (they have buoyed part of the way back since) in in Q3 revenue guidance: $26-28.5 billion is now what the company expects to bring in on the top line next quarter, well off the Zacks consensus pace of $30.33 billion. This was already Meta’s first-ever reported lower revenue growth-rate, so guiding future revenues down is less than a great sign.
Qualcomm (QCOM - Free Report) , on the other hand, posted higher sales and earnings in its fiscal Q3 than expected: earnings of $2.96 per share on $10.9 billion surpassed the $2.86 per share on $10.9 billion in revenues estimated. Next quarter earnings guidance brings the Zacks consensus in the higher range of expectations, while revenue guidance on the high end goes lower than anticipated $11.85 billion. Thus, shares are down -3.82% in late trading.
Ford (F - Free Report) managed to obliterate expectations on both top and bottom lines in its Q2 report after the closing bell: 68 cents per share was well ahead of the 43 cents analysts had been considering, with $37.91 billion on the top line zooming past the $32.74 billion estimate. The automaking giant now has adjusted free cash flow of $2.9 billion, and it is raising its dividend by 15 cents per share.
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Fed Moves 75bps, Market Applauds; Plus Earnings for META, QCOM and F
In a unanimous decision at the latest meeting of the Federal Open Market Committee (FOMC), it was decided that the Fed funds rate would be raised another 75 basis points (bps), as widely expected. This brings the rate to 2.25-2.50%, up 225 bps in less than five months. Fed Chair Jay Powell said the FOMC was “moving expeditiously” to bring inflation down, including that “ongoing rate hikes [are] appropriate.”
Market participants rejoiced, even though we expect to continue to see higher loan rates going forward. For one thing, the Fed keeping the foot on the gas infers that the economy is still strong. It also takes out a key question mark, and everyone knows the market hates uncertainty. The Dow gained 434 points on the day, +1.37%, while the S&P 500 grew 102 points, +2.61%. The Nasdaq raced ahead +469 points today, +4.06%, while the Russell 2000 gained a very respectable +2.39%.
The Fed commented that supply and demand imbalances are keeping inflation high, elevated from prices pressures. In oil & gas, this was primarily blamed on the Ukraine war, which is now five months old. The Fed will also continue its balance-sheet reduction program. The 75 bps hike was a unanimous decision in light of economic prints seen over the past several weeks.
Powell also commented that “the economy is resilient,” with labor demand remaining very strong. It appears to have been a very effective address from Powell following the Fed statement, as every sector closed Wednesday up big. What the market takeaway seems to be is the sense that Powell is projecting a mild recession to befall the economy, at worst. Investors, for the most part, can live with that.
Meta Platforms (META - Free Report) released Q2 earnings results after today’s close, with earnings of $2.46 per share missing the Zacks consensus by 5 cents per share, on $28.82 billion in quarterly sales which narrowly outperformed expectations of $28.74 billion. Daily Active Users (DAU) slightly outperformed expectations to 1.97 billion, while Monthly Active Users (MAU) dropped a bit from expectations to 2.93 billion users.
The biggest reason Meta shares dropped -6% on the initial news (they have buoyed part of the way back since) in in Q3 revenue guidance: $26-28.5 billion is now what the company expects to bring in on the top line next quarter, well off the Zacks consensus pace of $30.33 billion. This was already Meta’s first-ever reported lower revenue growth-rate, so guiding future revenues down is less than a great sign.
Qualcomm (QCOM - Free Report) , on the other hand, posted higher sales and earnings in its fiscal Q3 than expected: earnings of $2.96 per share on $10.9 billion surpassed the $2.86 per share on $10.9 billion in revenues estimated. Next quarter earnings guidance brings the Zacks consensus in the higher range of expectations, while revenue guidance on the high end goes lower than anticipated $11.85 billion. Thus, shares are down -3.82% in late trading.
Ford (F - Free Report) managed to obliterate expectations on both top and bottom lines in its Q2 report after the closing bell: 68 cents per share was well ahead of the 43 cents analysts had been considering, with $37.91 billion on the top line zooming past the $32.74 billion estimate. The automaking giant now has adjusted free cash flow of $2.9 billion, and it is raising its dividend by 15 cents per share.
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