Daily Markets: The Fed Still Further to Go to Tamp Down Price Pressures

Man paying for gas with cash during a time of inflation
Credit: Jose Luis Gonzalez - Reuters /

Today’s Big Picture

Asia-Pacific equity indexes ended today’s session mostly lower with South Korea’s Kospi falling 1.4%, Hong Kong’s Hang Seng finishing the day off 1.2%, and both Japan’s Nikkei and India’s Sensex shedding 0.4%. China’s Shanghai Composite lost 0.2% while Australia’s ASX All closed the day up 0.2%. By mid-day trading, European equity indices were predominantly in the red while U.S. equity futures post to a tough market open later this morning. 

The market continues to digest the recent batch of stronger-than-expected U.S. economic data that signaled the Fed has further to go to extinguish price pressures. San Francisco Fed President Mary Daly said a pause in rate hikes was “off the table,” and with another round of Fed speakers, today odds are that sobering message will be reiterated. In response, Goldman Sachs (GS) upped its forecast for peak U.S. interest rates to 5.25%, up from its previous call of 5%. As investors reassess the direction of interest rates and their impact on the economy, JPMorgan (JPM) forecasts a “mild recession” in the U.S. in the back half of 2023 with the Fed only beginning to ease back on interest rates in 2Q 2024. Those forecasts and others like them are likely to drive a re-think for what’s ahead in the coming quarters.

Data Download

International Economy

China’s manufacturing hub of Guangzhou is battling China's largest, latest COVID-19 outbreak, with new daily infections raising concerns that it is reaching a scale matching Shanghai's outbreak earlier this year. China is also battling coronavirus outbreaks in numerous major cities, including Chongqing and the capital Beijing. According to data published by Nomura, as of Monday, lockdowns are in place across areas responsible for more than 15% of China’s GDP up from 12% the prior week.

Passenger car registrations in the European Union jumped 12.2% YoY during October to 745,855 units in October. While this was the third consecutive month of growth, sales remained well below the October 2019 pre-pandemic levels of about 1.2 million units. The Eurozone consumer price inflation was revised slightly down to 10.6 percent YoY in October from a preliminary estimate of 10.7%. Still, the rate was the highest on record and well above the European Central Bank's target of 2.0%, amid surging energy prices and euro weakness. 

Domestic Economy

8:30 AM ET will see the October update of Housing Starts and Building Permits. Starts are expected to come in lower at 1.508 million from the previously reported 1.564 million and Permit growth is expected to have declined in October but only by 0.60% as compared to last month’s 8.1% drop.

Also appearing at 8:30 are the latest updates for Weekly Initial (as of 11/12) and Continuing Job Claims (as of 11/05). Initial claims are expected to come in lower at 222,000 as compared to the previous week’s 225,000 and Continuing Claims consensus is 1.5 million, up slightly from the previous 1.493 million. 

The Philadelphia Fed Index for November is expected as well, and estimates are for it to show a modest increase to -8from the previous -8.7 level.


Markets softened yesterday as the Dow declined 0.12%, the S&P 500 lost 0.83%, the Nasdaq Composite fell 1.54%, and the Russell 2000 closed 1.91% lower. Sectors were mixed with Energy and Consumer Discretionary taking the biggest hits and Utilities and Consumer Staples the only groups closing higher. As retailer earnings begin to unfold, TJX Companies (TJXgained 5.19% on raised guidance while Target (TGTwas punished, down 13.14% on news of what the industry calls “shrinkage” (product theft) eclipsing $600 million.

Here’s how the major market indicators stack up year-to-date:

  • Dow Jones Industrial Average: -7.66%
  • S&P 500: -16.94%
  • Nasdaq Composite: -28.52% 
  • Russell 2000: -17.47%
  • Bitcoin (BTC-USD): -64.12%
  • Ether (ETH-USD): -67.09%

Stocks to Watch

Before trading kicks off for U.S.-listed equities, BJ’s Wholesale (BJ), Dole plc (DOLE), Kohl’s (KSS), Macy’s (M), and The Children’s Place (PLCE) will be among the batch of companies reporting their latest quarterly results. 

Continued strength in data center revenue offset a more than 50% gaming revenue decline during Nvidia’s (NVDAOctober quarter. Total revenue for the quarter fell 16.5% YoY to $5.93 billion, better than the $5.82 billion consensus. Data Center revenue was $3.83 billion, up 31% You and 1% QoQ with sequential comparisons impacted by softness in China. Automotive revenue was $251 million, up 86% YoY and up 14% QoQ driven by self-driving solutions. For the current quarter, Nvidia is guiding revenue to $5.88-$6.12 billion vs. the $6.14 billion consensus with modest sequential growth in Automotive, Gaming, and Data Center.

Shares of Cisco (CSCO) traded higher in aftermarket trading last night after it reported better than consensus October quarter revenue and EPS. For the current quarter, the company expects its top line to grow 4.5%- 6.5% with EPS of $0.84-$0.86, essentially bookending the respective consensus forecasts. For the full year, Cisco raised its revenue forecast to 4.5%-6.5% vs. its prior guidance of 4%-6%. The company shared it is “encouraged” by what it is seeing on the supply chain front as shortages continued to ease compared to the prior quarter, but its customers are also closely watching the macroeconomic landscape. 

Semiconductor, LED, and electronic assembly solutions company Kulicke & Soffa (KLICcrushed September quarter expectations as revenue soared 41.0% YoY to $286.3 million. However, due to a combination of macro and industry-related factors, the company continues to anticipate a period of capacity digestion for its high-volume assembly solutions over the coming quarters. That led K&S to issue downside guidance for the current quarter with EPS in the range of $0.18-$0.22 vs. the $0.82 consensus with revenue of $155-$195 million, well below the $244.4 million consensus. 

Bath & Body Works (BBWI) reported better than expected October quarter results and issued in-line guidance for the current quarter with EPS of $1.45-$1.65 compared to $0.40 in the prior one. Baked into its current quarter guidance is a mid-single to low-double-digit revenue decline vs. the year-ago quarter, which suggests $2.72-$2.88 billion vs. the $2.76 billion consensus. We’d note that forward view compares to the 4.8% drop in revenue for the company’s October quarter. 

Pfizer (PFE) and BioNTech (BNTX) have started a phase 1 trial of a next-generation COVID-19 vaccine, which aims to enhance SARS-CoV-2 T cell responses and potentially broaden protection against COVID-19.

A proposal by the New York City Department of Consumer and Worker Protection would force companies such as Uber (UBER), DoorDash (DASH), and Just Eat NV’s (JTKWY) Grubhub to set a minimum pay rate for the delivery workers of $17.87, and to increase it in three years to almost $24.

Stellantis NV (STLA) announced it will acquire aiMotive, a developer of advanced artificial intelligence and autonomous driving software. 


Defense and tactical system manufacturer KWESST Micro Systems (KWE) is expected to start trading in the week ahead. Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

Applied Materials (AMAT), Dolby Labs (DLBY), Farfetch (FTCH), Gap (GPS), Palo Alto Networks (PAWN), Post (POST), Ross Stores (ROST), and Williams Sonoma (WSM) are expected to report quarterly results after equities stop trading today. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar

On the Horizon

Friday, November 18

  • UK: Retail Sales - October
  • US: Existing Home Sales – October 

Thought for the Day

“Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value.” ~ Michael Porter


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Chris Versace

Christopher (Chris) Versace is the Chief Investment Officer and thematic strategist at Tematica Research. The proprietary thematic investing framework that he’s developed over the last decade leverages changing economic, demographic, psychographic and technology landscapes to identify pronounced, multi-year structural changes. This framework sits at the heart of Tematica’s investment themes and indices and builds on his more than 25 years analyzing industries, companies and their business models as well as financial statements. Versace is the co-author of “Cocktail Investing: Distilling Everyday Noise into Clear Investing Signals” and hosts the Thematic Signals podcast. He is also an Assistant Professor at NJCU School of Business, where he developed the NJCU New Jersey 50 Index.

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Mark Abssy

Mark Abssy is Head of Indexing at Tematica Research focused on index and Exchange Traded Product development. He has product development and management experience with Indexes, ETFs, ETNs, Mutual Funds and listed derivatives. In his 25 year career he has held product development and management positions at NYSE|ICE, ISE ETF Ventures, Morgan Stanley, Fidelity Investments and Loomis Sayles. He received a BSBA from Northeastern University with a focus in Finance and International Business.

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