Dow Jones Futures: Market Rallies Strongly As Powell Hints At Slower Fed Rate Hikes, But Watch Out For 'Day 2'
Dow Jones futures fell slightly overnight, along with S&P 500 futures and Nasdaq futures, with Meta Platforms and Qualcomm reporting earnings.
The stock market rally had big gains Wednesday after the Federal Reserve hiked rates by 75 basis points for a second straight meeting. Fed chief Jerome Powell signaled that policymakers are looking toward slowing the pace of tightening down the road, even as the economy remains stressed and inflation focused.
The major indexes already were modestly to strongly higher, fueled by positive reactions to earnings from Microsoft (MSFT), Google parent Alphabet (GOOGL) and Enphase Energy (ENPH).
Sen. Joe Manchin, D-W.V., announced a deal with Senate Majority Leader Chuck Schumer late Wednesday on a reconciliation bill with tax, climate and energy provisions. The deal, which could face a number of hurdles, includes a 15% minimum corporate tax rate, drug price controls, ObamaCare subsidy increases and pro-solar and green energy provisions.
Fed Meeting
The Federal Reserve raised rates by 75 basis points on Wednesday afternoon, lifting the rate to a target of 2.25%-2.5%.
The central bank slightly downgraded its view of the economy, noting that "spending and production have softened." But "job gains have been robust" while "inflation remains elevated."
Fed chief Powell, speaking after the Fed meeting, stressed that policymakers are "strongly committed to bringing inflation down." He said the economy is "resilient" with labor markets "extremely tight."
Powell said it will likely be "appropriate" to slow Fed rate hikes as they become "more restrictive." He expects Fed rates to be "moderately restrictive" by year-end, which he said would be in the 3%-3.5% range.
After the Fed rate hike and Powell's comments, the odds of a 50-basis-point move on Sept. 21 rose to 56% from about 50-50 before the Fed announcement. Further out, markets expect modest moves over the year's final two Fed meetings, to end the year around 3.25%-3.5%.
Key Earnings
Meta Platforms (META) and Qualcomm (QCOM) headlined key earnings, with chip-equipment maker Lam Research (LRCX), ServiceNow (NOW), O'Reilly Auto (ORLY), Ford Motor (F) and Teladoc Health (TDOC) also reporting late Wednesday.
Meta stock retreated solidly after the Facebook parent missed on earnings, reported its first-ever revenue decline and guided low.
Qualcomm stock fell modestly overnight on weak revenue guidance.
LRCX stock fell slightly after better-than-expected quarterly results.
NOW stock tumbled as the business software giant cut subscription revenue guidance after slightly beating Q2 views.
Ford stock popped after easily beating views, with a 423% EPS gain.
ORLY stock fell after earnings fell short and the auto parts retailer guided lower.
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