Following yesterday’s Snap (SNAP-US) after the collapse of U.S. stocks, on Wednesday (25th) U.S. stocks opened lower and then rose slightly. The market has a strong wait-and-see mood. Investors are waiting for the minutes of the Federal Reserve (Fed) May monetary policy meeting to be released later to evaluate future policy trends.
Before the deadline,Dow Jones Industrial Averagerose slightly by 0.04%,Nasdaq Composite Indexrose 0.2%,S&P 500 Indexup 0.12%,Philadelphia SemiconductorThe index rose nearly 0.6 percent.
Fed Chairman Powell has previously said he will keep raising interest rates until there is clear and convincing evidence that inflation is falling. The market expects the Fed to raise interest rates by two yards (50 basis points) in June and July, but investors are worried that the US economy will face a growth recession.
Business activity slowed moderately, mainly due to China’s coronavirus lockdown, supply chain tensions stemming from the Russia-Ukraine war that hindered factory production, and rising prices reducing demand for services, data from S&P Global showed yesterday.
The initial value of the Markit Manufacturing Purchasing Managers’ Index (PMI) in May was 57.5, a new low in 3 months, in line with market expectations but lower than the 59.2 in April; the initial value of the Markit composite PMI last month was affected by rising inflation pressure and supply Deteriorating delivery times and weak demand growth fell to 53.8 from 56 previously, the slowest pace in four months.
In addition, the April durable goods orders announced today also slowed down, only reporting 0.4% less than the market expected 0.6%, also lower than the previous value.
Investors worry about a sharp slowdown in economic growth amid tighter monetary conditions, the Russian-Ukrainian war and China’s lockdown will further worsen the outlook, while traders are cutting back on U.S. growth amid signs of softening. Fed rate hike bets. Raphael Bostic, a dovish Fed official and president of the Federal Reserve Bank of Atlanta, urged the Fed to proceed with caution.
On the Chinese side, following the recent National Standing Session and the introduction of a basket of 33 measures to “stabilize the economy” in six areas, Chinese Premier Li Keqiang once again called on the “National Video and Telephone Conference to Stabilize the Economic Market”, saying that efforts should be made to ensure the economy in the second quarter. Reasonable growth and the unemployment rate will drop as soon as possible. He also pointed out that the relevant economic stabilization policies will be implemented by the end of May, and the national statistics departments will also release economic data in a “realistic” manner.
As of 21:00 on Wednesday (25th) Taipei time:
Stocks in focus:
Dick’s Sporting Goods(DKS-US) fell 6.84% to $66.37 a share in early trade
Sporting goods maker Dick’s Sporting Goods reported its latest earnings before the market opened. Although strong consumer purchases boosted revenue and beat Wall Street’s profits, the company, like other retailers, could not escape the impact of inflation and lowered its full-year forecast.
Dick’s Sporting Goods reported first-quarter revenue of $2.7 billion and adjusted EPS of $2.85, both beating consensus estimates of $2.59 billion and $2.48, and forecasting fiscal 2022 adjusted EPS of between Between $9.15-11.7, the previous estimate was $11.7-13.10, which was lower than the market average estimate of $12.56.
Lyft(LYFT-US) rose 0.24% to $16.76 a share in early trade
Lyft has announced that it will slow down hiring, cut some departmental budgets, and join rival Uber (UBER-US) to manage costs. Given the slow pace of the recovery, Lyft will significantly slow hiring in the U.S. and focus on key roles, such as its core ride-hailing business, said John Zimmer, the company’s co-founder and president. In addition, Lyft will issue stock options to eligible employees.
Northstrong Department Store (JWN-US) rose 1.69% to $21.03 a share in early trade
High-end retailer Nordstrom recently beat analysts’ expectations for its first-quarter results and raised its full-year outlook, forecasting revenue to grow 6% to 8% this year, up from 5% to 7% previously. In addition, full-year earnings per share are expected to be in the range of $3.38 to $3.68, up from $3.15 to $3.50 previously, and will fall in the range of $3.2 to $3.5 on an adjusted basis.
Even so, the retailer’s adjusted loss per share was slightly above analysts’ expectations. Net income for the quarter ended April 30 was $20 million, or $0.13 a share, compared with a net loss of $166 million, or $1.05 a share, in the same period a year earlier.
Today’s key economic data:
- U.S. durable goods orders in April reported a preliminary value of 0.4%, expected 0.6%, and the previous value of 0.6%
- U.S. core durable goods orders reported 0.3% in April, expected 0.6%, and the previous value of 1.1%
- US last week (as of 5/20) EIA crude oil inventory changes expected – 2.129 million barrels, the previous value – 3.394 million barrels
Wall Street Analysis:
Mark Haefele, chief investment officer at UBS Global Wealth Management, said: “Our core assumption remains that a recession is inevitable, geopolitical risks will ease this year, and stocks will move higher as a result. But the recent decline in stocks underscores that there is a choice. stability and the importance of considering strategies to reduce volatility.”
“From our perspective, recession fears are real,” said Salman Baig, a portfolio manager on Unigestion’s cross-asset solutions team. “The Fed has a huge task at hand right now, which is a soft landing for the economy.”
Investors are constantly reassessing the likelihood that the Fed and other central banks will continue to tighten monetary policy, said Andrea Cicione, head of strategy at TS Lombard. What will happen is that the Fed is still determined to normalize monetary policy. A policy reassessment will begin once they reach their expected neutral rate zone of around 3%, and the minutes of the upcoming meeting will confirm that the Fed will be fighting inflation for now.