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Markets Tack Down Again; CSCO Beats in Q4 (as Usual)

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Markets are clearly reversing the exuberance they had been expressing for much of this summer, down again for the regular trading session this Hump Day. The Dow lost another -155 points, -0.45%, while the Nasdaq was down -154 points, -1.14%. The S&P 500 split the difference on the day, -0.76%, while the small-cap Russell 2000 dropped -0.97%. Over the past month, only the Dow remains in positive territory, +0.5%, while the Nasdaq is -5.4%, the S&P -2.6% and the Russell -4.0%.

Earlier today, 15 minutes before the opening bell, Industrial Production and Capacity Utilization numbers came in, with Production posting the second-straight negative print, -0.20% (better than the -0.43% the previous month), and the only two negative results in the past 12-month cycle. Capacity Utilization, on the other hand, came in 20 basis points (bps) higher than expected to 79.3%, nicely recovering from the downwardly revised 78.6% posted for June, which was the lowest of the cycle. Utilization is now -0.4% below its long-run average.

This afternoon, Fed Minutes from the latest Federal Open Market Committee (FOMC) meeting on July 25-26 hit the tape, sans any real surprises. The vote to increase the Fed funds rate by an additional 25 bps was unanimous among all voting members, with its 2% inflation goal still cited in the notes. The banking industry is considered “sound and resilient,” while tighter credit for households and businesses are creating disinflationary conditions. The FOMC does not meet this month; the next interest rate decision will be made five weeks from tonight, September 20th.

Cisco Systems (CSCO - Free Report) released fiscal Q4 results after today’s close, with both earnings and sales outperforming estimates. This is no shock, at least on the bottom line — Cisco has posted a (slight) earnings beat every quarter since Zacks recalibrated earnings results nine years ago — but its $1.14 per share, at +8% over consensus, represents the tech giant’s biggest beat since the November quarter of 2020. Yet guidance was unchanged, save for full-year revenues, which was taken lower, and Cisco stock is turning down -2% in late trading on the news.

Tomorrow morning, we’ll see earnings results from the biggest of the big-box retailers: Walmart (WMT - Free Report) , which is expected to fetch revenue growth of +4.6% for the quarter, but negative earnings growth of -4.5%. Walmart currently rides a four-quarter winning streak of earnings beats, with a trailing average beat of +12%. Initial and Continuing Jobless Claims will also come out ahead of Thursday’s open, with a new Philly Fed survey for August thrown in for good measure.

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