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Sunny Markets Ahead of Fed Appearances; DE Beats, FL Misses
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Friday, May 19th, 2023
The markets keep on the sunny side again this morning, with indices looking to complete their best-performing weeks in almost two months. Following the Dow and S&P 500’s highest closes since August 2022 and the Nasdaq’s best day since May 5th, the Dow is up another +100 points at this hour, the S&P is +15 and the Nasdaq +30. Market participants clearly feel good that Congress will reach a deal on the debt ceiling, and the “soft landing” narrative seems to have legs.
As far as potential market movers today, we will hear from both New York Fed President John Williams and, separately, a forum called “Perspectives on Monetary Policy” featuring Fed Chair Jerome Powell and former Fed Chair Ben Bernanke on the panel. Because the most recent Fed meeting is not so far in the rear view — and the next meeting not until mid-June — we don’t expect to hear much at odds drastically from current Fed opinion.
That said, whether the rate-hike stint is being retired has been very much an open question, with resilience in aspects of the economy such as employment tending to tilt expectations toward another 25 basis-point (bps) sandbag to staunch the tide of inflation. But the markets aren’t pricing that in; at this stage — and with this level of market exuberance — most investors are expecting the Fed to pause at its next meeting. Could today’s talks throw cold water on this assumption?
Farm machinery giant Deere & Co. (DE - Free Report) put up very strong numbers in its fiscal Q2 earnings report out before today’s opening bell. Earnings of $9.65 per share was a +12.6% positive surprise over the Zacks consensus, and nearly 3x the trailing 4-quarter beat average. Revenues of $16.08 billion easily surpassed the $14.84 billion, by an impressive +8.3%. Shares are up +4.4% on the news in today’s pre-market, but still down year to date. For more on DE’s earnings, click here.
On the other side of the spectrum, Foot Locker (FL - Free Report) broke its streak of 11 straight quarters above expectations, posting earnings of 70 cents per share versus the Zacks estimate 78 cents. This is also less than half the $1.60 per share reported in the year-ago quarter. Revenues of $1.93 billion missed consensus by -3.2%. And pre-market trading — in what we’ve already described as a bullish environment — is dismal: -25%. This pushes Foot Locker shares into negative territory for the year. For more on FL’s earnings, click here.
Image: Bigstock
Sunny Markets Ahead of Fed Appearances; DE Beats, FL Misses
Friday, May 19th, 2023
The markets keep on the sunny side again this morning, with indices looking to complete their best-performing weeks in almost two months. Following the Dow and S&P 500’s highest closes since August 2022 and the Nasdaq’s best day since May 5th, the Dow is up another +100 points at this hour, the S&P is +15 and the Nasdaq +30. Market participants clearly feel good that Congress will reach a deal on the debt ceiling, and the “soft landing” narrative seems to have legs.
As far as potential market movers today, we will hear from both New York Fed President John Williams and, separately, a forum called “Perspectives on Monetary Policy” featuring Fed Chair Jerome Powell and former Fed Chair Ben Bernanke on the panel. Because the most recent Fed meeting is not so far in the rear view — and the next meeting not until mid-June — we don’t expect to hear much at odds drastically from current Fed opinion.
That said, whether the rate-hike stint is being retired has been very much an open question, with resilience in aspects of the economy such as employment tending to tilt expectations toward another 25 basis-point (bps) sandbag to staunch the tide of inflation. But the markets aren’t pricing that in; at this stage — and with this level of market exuberance — most investors are expecting the Fed to pause at its next meeting. Could today’s talks throw cold water on this assumption?
Farm machinery giant Deere & Co. (DE - Free Report) put up very strong numbers in its fiscal Q2 earnings report out before today’s opening bell. Earnings of $9.65 per share was a +12.6% positive surprise over the Zacks consensus, and nearly 3x the trailing 4-quarter beat average. Revenues of $16.08 billion easily surpassed the $14.84 billion, by an impressive +8.3%. Shares are up +4.4% on the news in today’s pre-market, but still down year to date. For more on DE’s earnings, click here.
On the other side of the spectrum, Foot Locker (FL - Free Report) broke its streak of 11 straight quarters above expectations, posting earnings of 70 cents per share versus the Zacks estimate 78 cents. This is also less than half the $1.60 per share reported in the year-ago quarter. Revenues of $1.93 billion missed consensus by -3.2%. And pre-market trading — in what we’ve already described as a bullish environment — is dismal: -25%. This pushes Foot Locker shares into negative territory for the year. For more on FL’s earnings, click here.
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