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Markets were mixed, but marginally so, on this day of the latest Federal Open Market Committee (FOMC) meeting which saw the Fed add 25 basis points (bps) to the Fed funds rate today. At 5.25-5.50%, we’re now at the highest levels since March 2001 — and it amounts to 525 bps in rate hikes since March of 2022. The Dow picked up +84 points on the session, +0.24%, while the Nasdaq and S&P 500 slipped -0.16% and -0.04%, respectively. The small-cap Russell 2000 outpaced the field, +0.83% on the session.
The Fed’s 25 bps increase is the first such hike since the May FOMC meeting; the Fed paused for June, as economic prints are reported in arrears and the Fed was allowing for some of the inflation metrics to catch up. But continued strong employment — which promotes higher wages, which means higher inflation — seized the Fed’s decision-making process today. Fed Chair Jay Powell himself he’s not sure if the Fed is done hiking rates for this cycle; it will remain data dependent.
One new wrinkle was that the Fed no longer expects a recession in 2023, citing resilience in the overall economy, including the labor force. “Getting inflation back down to +2% has a long way to go,” is the direct quote from Powell this afternoon. Yet the market continues to price-in the end of the road in rate hikes. The next FOMC meeting doesn’t begin until the latter half of September; there are plenty of opportunities for economic prints to hammer FOMC opinion over the next two months.
Meta Platforms (META - Free Report) outperformed expectations in its Q2 earnings results after today’s close, with earnings of $2.98 per share bettering the $2.87 in the Zacks consensus, on $32.0 billion in quarterly revenues which outpaced the $30.91 billion anticipated, +11% year over year. Revenue guidance for the full year was bumped up to $32-34.5 billion, notably ahead of the consensus $31.34 billion. Daily Active Users (DAU) gained +5% to 2.06 billion. Shares initially gained +7.5% on the news, but has since buoyed back down to +5.5%.
Chipotle (CMG - Free Report) shares, on the other hand, are down -6.6% at this hour on mixed results in its Q2 release this afternoon. Earnings of $12.65 per share amounted to a clear beat over the $12.25 expected (and the $9.30 per share reported in the year-ago quarter) on a slightly lower $2.51 billion in sales for the quarter. Same-store sales rose +7.4%, also a slight miss from expectations, and the company — one of the top-performing restaurant stocks this year so far — now expects low-to-mid single-digit same-store sales growth.
eBay (EBAY - Free Report) has outperformed estimates slightly on both top and bottom lines after the close: earnings of $1.03 per share came to a 4-cent beat, and revenues of $2.54 billion was an improvement on the Zacks consensus $2.51 billion. Earnings guidance was bumped down to a range of 96 cents to $1.01 per share; consensus had been for $1.03 per share. Revenue guidance, on the other hand, improved on the top end of the range to $2.46-2.52 billion. Yet shares are slipping -2.7% on the news in late trading.
Lam Research (LRCX - Free Report) also posted beats for its fiscal Q4 results, with earnings of $5.98 per share outpacing the $5.03 expected on $3.21 billion, which improved over the estimated $3.12 billion. The wafer-fabrication equipment maker has improved forecasts based on coming A.I. business, and shares gained +3.5% immediately upon the press release hitting the tape.
Image: Bigstock
Fed Hikes, Markets Mixed; META, EBAY Beat in Q2, CMG Misses
Markets were mixed, but marginally so, on this day of the latest Federal Open Market Committee (FOMC) meeting which saw the Fed add 25 basis points (bps) to the Fed funds rate today. At 5.25-5.50%, we’re now at the highest levels since March 2001 — and it amounts to 525 bps in rate hikes since March of 2022. The Dow picked up +84 points on the session, +0.24%, while the Nasdaq and S&P 500 slipped -0.16% and -0.04%, respectively. The small-cap Russell 2000 outpaced the field, +0.83% on the session.
The Fed’s 25 bps increase is the first such hike since the May FOMC meeting; the Fed paused for June, as economic prints are reported in arrears and the Fed was allowing for some of the inflation metrics to catch up. But continued strong employment — which promotes higher wages, which means higher inflation — seized the Fed’s decision-making process today. Fed Chair Jay Powell himself he’s not sure if the Fed is done hiking rates for this cycle; it will remain data dependent.
One new wrinkle was that the Fed no longer expects a recession in 2023, citing resilience in the overall economy, including the labor force. “Getting inflation back down to +2% has a long way to go,” is the direct quote from Powell this afternoon. Yet the market continues to price-in the end of the road in rate hikes. The next FOMC meeting doesn’t begin until the latter half of September; there are plenty of opportunities for economic prints to hammer FOMC opinion over the next two months.
Meta Platforms (META - Free Report) outperformed expectations in its Q2 earnings results after today’s close, with earnings of $2.98 per share bettering the $2.87 in the Zacks consensus, on $32.0 billion in quarterly revenues which outpaced the $30.91 billion anticipated, +11% year over year. Revenue guidance for the full year was bumped up to $32-34.5 billion, notably ahead of the consensus $31.34 billion. Daily Active Users (DAU) gained +5% to 2.06 billion. Shares initially gained +7.5% on the news, but has since buoyed back down to +5.5%.
Chipotle (CMG - Free Report) shares, on the other hand, are down -6.6% at this hour on mixed results in its Q2 release this afternoon. Earnings of $12.65 per share amounted to a clear beat over the $12.25 expected (and the $9.30 per share reported in the year-ago quarter) on a slightly lower $2.51 billion in sales for the quarter. Same-store sales rose +7.4%, also a slight miss from expectations, and the company — one of the top-performing restaurant stocks this year so far — now expects low-to-mid single-digit same-store sales growth.
eBay (EBAY - Free Report) has outperformed estimates slightly on both top and bottom lines after the close: earnings of $1.03 per share came to a 4-cent beat, and revenues of $2.54 billion was an improvement on the Zacks consensus $2.51 billion. Earnings guidance was bumped down to a range of 96 cents to $1.01 per share; consensus had been for $1.03 per share. Revenue guidance, on the other hand, improved on the top end of the range to $2.46-2.52 billion. Yet shares are slipping -2.7% on the news in late trading.
Lam Research (LRCX - Free Report) also posted beats for its fiscal Q4 results, with earnings of $5.98 per share outpacing the $5.03 expected on $3.21 billion, which improved over the estimated $3.12 billion. The wafer-fabrication equipment maker has improved forecasts based on coming A.I. business, and shares gained +3.5% immediately upon the press release hitting the tape.
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