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Market Catches Bid a Day Ahead of Powell's Jackson Hole Speech
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After a week of cautious reticence in the markets, investors betrayed that they’re not so worried about Fed Chair Jay Powell’s speech at Jackson Hole tomorrow, after all. The Dow climbed +322 points, or +0.98% — and underperformed its major index brethren. The S&P 500 was +1.41% on the day, led by Materials, while the small-cap Russell 2000 reached +1.44% and the tech-heavy Nasdaq won the day, +1.67%.
Market participants are registering their with their stock-buying today, after taking down indices over the past week or so. It’s also a typical late-summer trading day in that overall volume is low. And the week’s big expected news item, Powell’s speech tomorrow, has been ruminated over and over so many times it’s fear factor has definitely receded. In the face of inflation starting to roll over, what’s the worst thing he could say?
Not even Fed hawk James Bullard, the St. Louis Fed President, insisting both the Fed and inflation itself will likely be “higher for longer” had a dampening effect on today’s rally. Perhaps the market already believes it has discounted expectations if the Fed funds rate hits 3% tomorrow (with a 75 bps hike), and ends 2022 in the neighborhood of, say, 4%. Then there’s Philadelphia President Patrick Harker, who reminded us today that a 50 bps move is still an historically aggressive rate.
Likely Powell will talk about data dependency — Consumer Prices, the Employment Situation, etc., of which there are several more reports due prior to the Fed’s next monetary policy meeting — in dictating how high the Fed will crank up rates next month. What we do know is that no one is discussing a 100 bps hike, which is something that had been bandied about prior the the most recent Fed meeting in July. Right now, it’s considered either between 75 or 50.
Fintech growth company Affirm (AFRM - Free Report) shares have fallen off a table, -14%, upon the release of its Q4 report after the closing bell today. A bottom line of -65 cents per share missed the Zacks consensus by -20 cents — its fifth miss in seven quarters since the company’s IPO — was soothed a bit by a better-than-expected $364 million in quarterly sales. But next-quarter and next-fiscal year guidance are down big: $365 million for fiscal Q1 (from $383 million consensus) and $1.62 billion for full-year 2023, off the $1.9 billion previously anticipated.
Affirm is currently experiencing growing pains as it strives forward; the higher revenues for the present quarter is obviously what you want to see, but in the company statement, the company now sees growth of online commerce falling back to pre-Covid levels. Plus, the “buy now, pay later” model carries with it innate challenges in a rising-interest-rate environment. Shares are now down -80% year to date.
The Gap (GPS - Free Report) , on the other hand, outperformed expectations Thursday afternoon, sending shares up +9.5% in the late session. Earnings of 8 cents per share walloped the -$0.04 estimate (which had been factoring-in a 13 cent per share inventory impairment) on $3.86 billion in quarterly sales, bettering the expected $3.82 billion. Its Banana Republic segment posted a surprise +8% year-over-year comp. Overall, not too shabby for an apparel company going through a CEO change.
Image: Shutterstock
Market Catches Bid a Day Ahead of Powell's Jackson Hole Speech
After a week of cautious reticence in the markets, investors betrayed that they’re not so worried about Fed Chair Jay Powell’s speech at Jackson Hole tomorrow, after all. The Dow climbed +322 points, or +0.98% — and underperformed its major index brethren. The S&P 500 was +1.41% on the day, led by Materials, while the small-cap Russell 2000 reached +1.44% and the tech-heavy Nasdaq won the day, +1.67%.
Market participants are registering their with their stock-buying today, after taking down indices over the past week or so. It’s also a typical late-summer trading day in that overall volume is low. And the week’s big expected news item, Powell’s speech tomorrow, has been ruminated over and over so many times it’s fear factor has definitely receded. In the face of inflation starting to roll over, what’s the worst thing he could say?
Not even Fed hawk James Bullard, the St. Louis Fed President, insisting both the Fed and inflation itself will likely be “higher for longer” had a dampening effect on today’s rally. Perhaps the market already believes it has discounted expectations if the Fed funds rate hits 3% tomorrow (with a 75 bps hike), and ends 2022 in the neighborhood of, say, 4%. Then there’s Philadelphia President Patrick Harker, who reminded us today that a 50 bps move is still an historically aggressive rate.
Likely Powell will talk about data dependency — Consumer Prices, the Employment Situation, etc., of which there are several more reports due prior to the Fed’s next monetary policy meeting — in dictating how high the Fed will crank up rates next month. What we do know is that no one is discussing a 100 bps hike, which is something that had been bandied about prior the the most recent Fed meeting in July. Right now, it’s considered either between 75 or 50.
Fintech growth company Affirm (AFRM - Free Report) shares have fallen off a table, -14%, upon the release of its Q4 report after the closing bell today. A bottom line of -65 cents per share missed the Zacks consensus by -20 cents — its fifth miss in seven quarters since the company’s IPO — was soothed a bit by a better-than-expected $364 million in quarterly sales. But next-quarter and next-fiscal year guidance are down big: $365 million for fiscal Q1 (from $383 million consensus) and $1.62 billion for full-year 2023, off the $1.9 billion previously anticipated.
Affirm is currently experiencing growing pains as it strives forward; the higher revenues for the present quarter is obviously what you want to see, but in the company statement, the company now sees growth of online commerce falling back to pre-Covid levels. Plus, the “buy now, pay later” model carries with it innate challenges in a rising-interest-rate environment. Shares are now down -80% year to date.
The Gap (GPS - Free Report) , on the other hand, outperformed expectations Thursday afternoon, sending shares up +9.5% in the late session. Earnings of 8 cents per share walloped the -$0.04 estimate (which had been factoring-in a 13 cent per share inventory impairment) on $3.86 billion in quarterly sales, bettering the expected $3.82 billion. Its Banana Republic segment posted a surprise +8% year-over-year comp. Overall, not too shabby for an apparel company going through a CEO change.
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