Wall Street Parties as Fed Hints at ‘Rate Hike’ Farewell, Stocks Do the Cha-Cha with Earnings’ Beat
The Wall Street spectacle turned into a financial fiesta as the three main stock indexes did the salsa, rallying nearly 2% on Thursday. Cheers echoed through the trading floors on whispers that the U.S. Federal Reserve might have finally parked its interest rate hiking campaign.
Chair Jerome Powell’s act of holding interest rates steady wasn’t the only showstopper; his nod to the recent bond yield surge’s impact on the economy hinted that the Fed might be saying ‘Adios’ to rate hikes. This sent longer-dated U.S. Treasury yields on a rollercoaster ride, plummeting down, and giving stocks a boost.
Analysts brought in the groove with better-than-expected earnings reports, even though the current-quarter guidance was a tad weaker than the Wall Street paparazzi expected. Despite the slightly off-key notes, analysts are still belting out tunes of growth. The data from LSEG revealed that Wall Street foresees a 7.2% rise in fourth-quarter earnings, down from the lofty 11% predicted earlier.
However, the third quarter seems to have delivered a standing ovation, with 80.9% of companies beating the analysts’ expectations while a mere 14.9% missed the mark. The Dow Jones Industrial Average led the conga line, shimmying up by 564.5 points, a 1.7% boost to 33,839.08. The S&P 500, not to be outdone, cha-chaed its way up 79.92 points, a 1.89% jump to 4,317.78. And the Nasdaq Composite threw its hat in the ring, adding 232.72 points, a 1.78% swing to 13,294.19. The S&P 500, in its fourth consecutive winning streak, hit its biggest one-day percentage gain since April and even had the nerve to close above its 200-day moving average for the first time since Oct. 24.
Not to be forgotten, the small-cap Russell 2000 index decided to rock the dance floor with its own moves, finishing up a staggering 2.7%, marking its grandest one-day percentage gain since June 6.
The Nasdaq, in its fifth day of taking the lead, made its biggest one-day percentage leap since July 28, leaving everyone breathless and exhilarated. Wall Street sure knows how to throw a party – as the markets celebrated, investors kept their fingers crossed for the beat to go on and the rhythm to stay strong!
Dow futures trade steady, Qualcomm, DoorDash gain after earnings
The Dow closed sharply higher Thursday, buoyed by a slump in Treasury yields ahead of the monthly jobs report due Friday following bets that the Federal Reserve is done raising interest rates.
At 14:32 ET (20:00 GMT), the Dow Jones Industrial Average was up 564 points or 1.7%, while the S&P 500 was up 1.9% and the NASDAQ Composite was up 1.8%.
The main indices on Wall Street closed substantially higher Wednesday, with the blue chip Dow gaining 220 points, or 0.7%, the broad-based S&P rose 1.1% and the tech-heavy Nasdaq climbed 1.6%.
Bets on end of Fed rate hikes gather momentum, pushing Treasury yields lower
This positive tone followed the conclusion of the latest policy-setting meeting by the U.S. Federal Reserve, which resulted in the central bank holding interest rates steady, as widely expected.
Fed chairman Powell “kept the door open for a rate hike in December and beyond, noting that the Committee is not confident they have achieved a ‘sufficiently restrictive’ stance, Deutsche Bank said in a note. But on the dovish side, Powell “did not sound perturbed by recent data strength, likely reflecting concerns around tighter FCIs and a desire to see more data to determine if these trends are sustained,” it added.
The unchanged decision arrived despite the recent uptick in the economy, stoking hopes that the Fed isn’t likely to hike rates again. Treasury yields added to losses from a day earlier, with the 10-year Treasury yield falling 12.3 basis points to 4.666%.
Starbucks steams ahead after impressive earnings, but Moderna sinks as weaker Covid demand dents earnings
Starbucks Corporation (NASDAQ:SBUX) rallied more than 9% after the coffee chain reported fiscal fourth-quarter results that topped Wall Street estimates on both the top and bottom lines, underpinned by growth in its key China market.
Moderna Inc (NASDAQ:MRNA), meanwhile, reported wider than expected loss in the third quarter as waning demand for its Covid vaccine led to $3.1B hit from unused vaccines, sending its shares 6% lower.
Palantir earnings show AI boost, Roku , PayPal ride earnings beat higher
Palantir Technologies Inc (NYSE:PLTR) delivered stronger than expected full-year guidance after reporting better-than-expected Q3 results as demand for its artificial intelligence products continued to gather momentum. Its shares ended 20% higher.
Palantir now expects to generate $599M and $603M of revenue in Q4, or $601M at the midpoint, topping Wall Street estimates of $600.5M.
Roku Inc (NASDAQ:ROKU) and PayPal Holdings Inc (NASDAQ:PYPL), meanwhile, rose more than 30% and 6% respectively after delivering quarterly better-than-expected quarterly results.
“Roku has shown resilience by expanding some of its key platform sub-segments, diversifying its advertising product offering, and launching new advertising products,” Wedbush said in note.
Oil gains after Fed stays steady
Oil prices rebounded Thursday, snapping a three-day decline, after the Fed kept interest rates on hold, hitting the dollar and helping risk appetite return to financial markets.
Markets largely traded past U.S. inventory data, with official data from the Energy Information Administration showing a slightly smaller-than-expected build in oil inventories over the week to October 27.
Distillate inventories saw a smaller-than-expected decline, while gasoline inventories saw an unexpected limited build.
Monthly jobs report in focus
The nonfarm payrolls report is expected to show the economy created 188,000 jobs in October, well below the 336,000 job gains in September.
Slowing job gains, which will ease pressure on wages and inflation are expected to add to bets that the Fed isn’t likely to raise rates again.
Consolidated Edison, the shining star of the utility world, didn’t just light up New York City but also the financial scene, beating the odds with its third-quarter profit surge. This ‘Big Apple’ power player had its eyes on the prize earlier this year, seeking an upturn in its rate case – the official meter for what consumers cough up for their electric, gas, and steam services. As the nation simmered in record-breaking heat, the demand for cooling solutions soared higher than a SpaceX launch.
In a shocking but delightful twist, the company’s electric segment revenue for the quarter ending on September 30 surged to a sparkling $3.47 billion, up from $3.33 billion the previous year. The real shocker came with the big reveal: a reported adjusted profit of $1.62 per share, outshining analysts’ puny expectations of $1.60 per share, according to LSEG data. Consolidated Edison’s electrifying performance isn’t just about lighting up homes – it’s about illuminating the stock market too!
Ah, investing on a Friday, the financial equivalent of a mic drop as the weekend beckons. It’s like placing your bets in the stock market casino just before the croupier signals the end of the trading week. With the potential to either kickstart your weekend with champagne dreams or leave you pondering market moves while everyone else is sipping margaritas. It’s a thrilling rollercoaster ride of anticipation, where the market’s mood swings can make or break your Friday feelings faster than you can say ‘bulls and bears.’ It’s a risky yet exciting game, like making a financial touchdown just before the weekend kickoff. So, grab your coffee, cross your fingers, and let the Friday investment dance begin!
Wall Street Parties as Fed Hints at ‘Rate Hike’ Farewell
Wall Street Parties as Fed Hints at ‘Rate Hike’ Farewell