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We got some color on the most recent Federal Open Market Committee (FOMC) meeting from early this month, which saw a unanimous 25 basis-point (bps) interest rate hike, bringing the Fed funds rate north of 5% for the first time in 15 years. The most heartening development here was the Fed removing the phrase “additional policy firming may be appropriate.” This signaled to market participants that a pause for future meetings was in the cards.
After taking a gander at these notes, we’re no longer quite so certain of this. There were, in fact, disagreements over the future course of action on interest rates. While most Fed members mentioned measured slowing economic growth is evident, suggesting there may not be a further need for rate hikes this cycle, a smaller group from the monetary policy body expresses concern that inflation is not coming down quickly enough, which would support another raise, perhaps at the June meeting three weeks from today.
Over the past 14 months of interest rate hikes (over 10 FOMC meetings), Fed Chair Jay Powell has done an admirable job telegraphing moves ahead of time, in order to alleviate shocks to the system. Considering the Fed has averaged a half-point hike in each meeting over this period, this is no mean feat. Yet to this point, no Powell nod in the direction of an additional hike mid-June has occurred; any attempt to lessen the impact of removing “additional policy firming” has also been non-existent.
Thus, even with the recent sell-off, we still see a pause in rate hikes going forward, with a likely small recession forcing the Fed to initiate its first interest rate cut since directly prior to the pandemic sometime before the end of the year. However, no Fed members have publicly advocated any rate cuts in 2023. Likely there’s still hope for a “soft landing” of the economy (i.e. not a recession), which is enough of a reason for the Fed to refrain from entertaining any rate cuts.
In any case, today’s weak trading day saw the Dow shed another -255 points, -0.77%, with the S&P 500 -0.73% for the session. The Nasdaq was the relative outperformer today, -0.61%, with the Russell 2000 bringing up the rear, -1.16% for the day. This has swung the small-cap index into negative territory over the past five days, along with the other major indices. The Dow pulls further into the red for the month and year-to-date, the only major index to be so situated.
Semiconductor innovator NVIDIA (NVDA - Free Report) continues to impress, with Q1 results well ahead of Zacks consensus estimates. Earnings of $1.09 per share easily outperformed the 92 cents expected — up +24% quarter over quarter — on $7.19 billion in sales, which obliterated the expected $6.52 billion in Q1. Shares are launching to new all-time highs on the report, +20% in after-hours trading.
Part of this impressive move to the upside — following no-less-impressive year-to-date growth of +114%, making it the most successive S&P 500 stock of 2023 — is in the tremendous upward revenue guidance to $11 billion from a Zacks consensus $7.10 billion previously projected. This, on gross margin guidance of 68-70%. You simply do not see numbers like these, especially from companies with $1 trillion market caps in their sights.
Surging demand was named in the press release as a big reason the inventor of the GPU chip had such a strong quarter. And with A.I. technology looking to grip the tech narrative going forward, NVIDIA is a prime player in this space, as well. Further, Data Center was expected to bring in $3.9 billion for Q1; it instead posted $4.82 billion. This is easily the shining beacon of Q1 earnings season.
Image: Shutterstock
NVIDIA Blows Away Q1, Shares +20% Late
We got some color on the most recent Federal Open Market Committee (FOMC) meeting from early this month, which saw a unanimous 25 basis-point (bps) interest rate hike, bringing the Fed funds rate north of 5% for the first time in 15 years. The most heartening development here was the Fed removing the phrase “additional policy firming may be appropriate.” This signaled to market participants that a pause for future meetings was in the cards.
After taking a gander at these notes, we’re no longer quite so certain of this. There were, in fact, disagreements over the future course of action on interest rates. While most Fed members mentioned measured slowing economic growth is evident, suggesting there may not be a further need for rate hikes this cycle, a smaller group from the monetary policy body expresses concern that inflation is not coming down quickly enough, which would support another raise, perhaps at the June meeting three weeks from today.
Over the past 14 months of interest rate hikes (over 10 FOMC meetings), Fed Chair Jay Powell has done an admirable job telegraphing moves ahead of time, in order to alleviate shocks to the system. Considering the Fed has averaged a half-point hike in each meeting over this period, this is no mean feat. Yet to this point, no Powell nod in the direction of an additional hike mid-June has occurred; any attempt to lessen the impact of removing “additional policy firming” has also been non-existent.
Thus, even with the recent sell-off, we still see a pause in rate hikes going forward, with a likely small recession forcing the Fed to initiate its first interest rate cut since directly prior to the pandemic sometime before the end of the year. However, no Fed members have publicly advocated any rate cuts in 2023. Likely there’s still hope for a “soft landing” of the economy (i.e. not a recession), which is enough of a reason for the Fed to refrain from entertaining any rate cuts.
In any case, today’s weak trading day saw the Dow shed another -255 points, -0.77%, with the S&P 500 -0.73% for the session. The Nasdaq was the relative outperformer today, -0.61%, with the Russell 2000 bringing up the rear, -1.16% for the day. This has swung the small-cap index into negative territory over the past five days, along with the other major indices. The Dow pulls further into the red for the month and year-to-date, the only major index to be so situated.
Semiconductor innovator NVIDIA (NVDA - Free Report) continues to impress, with Q1 results well ahead of Zacks consensus estimates. Earnings of $1.09 per share easily outperformed the 92 cents expected — up +24% quarter over quarter — on $7.19 billion in sales, which obliterated the expected $6.52 billion in Q1. Shares are launching to new all-time highs on the report, +20% in after-hours trading.
Part of this impressive move to the upside — following no-less-impressive year-to-date growth of +114%, making it the most successive S&P 500 stock of 2023 — is in the tremendous upward revenue guidance to $11 billion from a Zacks consensus $7.10 billion previously projected. This, on gross margin guidance of 68-70%. You simply do not see numbers like these, especially from companies with $1 trillion market caps in their sights.
Surging demand was named in the press release as a big reason the inventor of the GPU chip had such a strong quarter. And with A.I. technology looking to grip the tech narrative going forward, NVIDIA is a prime player in this space, as well. Further, Data Center was expected to bring in $3.9 billion for Q1; it instead posted $4.82 billion. This is easily the shining beacon of Q1 earnings season.
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