Markets pulled back from their steady trading levels today — three of which were in the red all session; only the Dow kept its head above water through the morning — once Fed Chair Jerome Powell, speaking at his press conference following the latest Fed meeting, expressed he was agnostic about a March rate cut. Indices jumped higher on the Fed’s release initially, but in terms of forecasting a March move lower than the current 5.25-5.50% interest rate levels, Powell said that this was “not the most-likely case.”
The Dow came down -317 points on the session, -0.82%, while the S&P 500 doubled this loss, -1.61%. The Nasdaq, after riding high just a couple short days ago, shed -345 points today, -2.23%, while the small-cap Russell 2000 took out the floor among the major indices on the Fed news, -2.45%. Of these, only the Russell has dipped back into negative territory year to date, but only the Dow is still higher after the past week of trading.
Overall, Powell was quite optimistic about the general state of things: “This is a good economy,” he said. The Fed’s interests continue to be to “finish the job on inflation while keeping labor markets strong.” He did mention a couple times that a new dot-plot was in the works, and would be forthcoming at the Fed’s next meeting, which is not until March 19-20. Until then, the Fed will have plenty of data to sift through on PCE, CPI and jobs numbers, etc., so those wringing their hands about Powell’s cool attitude toward a March cut should not give into despair just yet.
The reason is right there in this morning’s ADP ADP private-sector payroll report, which tallied the third lowest month in the past year, 107K, and notched the sixth-straight sub-200K print on private-sector jobs. Should this — as well as the U.S. government’s non-farm payroll report, which comes out Friday morning — slip to sub-100K or thereabouts over the next two months, this could be a real sign that the economy is slipping further, and rate cuts at that time might be warranted to better ensure the “soft landing” we’ve been crossing our fingers for over the past year.
Qualcomm QCOM is the latest major company to report earnings after the bell today, with fiscal Q1 earnings of $2.75 per share easily surpassing the $2.38 in the Zacks consensus (and $2.37 per share in the year-ago quarter). Revenues were also strongly ahead of estimates: $9.92 billion from the anticipated $9.50 billion. However, guidance for Q2 is down on both top sand bottom lines. Chip sales in the reported quarter were +7% overall, including a +31% jump in its fledgling auto business. Shares have been bouncing around in late trading.
Tomorrow morning brings us a fresh litany of economic reports, from Initial and Continuing Jobless Claims to S&P and ISM Manufacturing, U.S. Q4 Productivity, Construction and Auto Sales. For quarterly earnings reports, we’ll hear from Merck MRK and Royal Caribbean RCL, among others. Tomorrow after the close is another marquee triple-bill: Apple AAPL, Amazon AMZN and Meta Platforms META. Of these, Amazon looks to take out easy earnings comps by a whopping +285%, while on the top line, Meta is expected to make gains of +21%.
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