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Markets Swing Lower Ahead of Fed Rate Decision; AMD, SBUX, F Beat Earnings
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It was a profound swoon with which we began today’s trading; we opened across indices in the red, but swung to session lows by 11am ET. JOLTS data on U.S. job openings — the first of several domestic employment reports this week — posted its first sub-10 million level in two years (following a prior month’s upward revision), and Factory Orders rebounded, but not as high as expected, to +0.9%. But the specter of a pending Fed funds rate increase, possibly without a clear message that the rate hikes are over, looms larger than these metrics.
The Dow had sunk lower than -600 points this morning, but closed well off those lows: -364 points, -1.08%. The Nasdaq gave up an identical -1.08%, -132 points on the day. The S&P 500, on a day in which it saw all 11 sectors finish in negative territory today, -1.16%, while the small-cap Russell 2000 closed with nearly twice the amount of losses as the other indices on the day, -2.10%. The Russell is once again negative, year to date, while the other indices hang onto gains.
Advance Micro Devices (AMD - Free Report) posted numbers that soundly outperformed Q1 expectations after today’s close: earnings of 60 cents per share outpaced the Zacks consensus by 4 cents, on quarterly sales of $5.35 billion, which improved on the projections though still came in lower by negative high single digits. This marks the fourth earnings positive surprise in the past five quarters.
Non-GAAP gross margins of +50% were just as expected, while Data Center revenues of $1.295 billion was light of estimates. The company sees Q2 sequential growth in Data Center and Client segments, offset by slightly lower forecasts in its Gaming and Embedded segments, and consequently is seeing its shares down -4.5% in the after-market session, following a very strong +38% share price hike year to date.
Starbucks (SBUX - Free Report) also outperformed expectations in its fiscal Q2 this afternoon, reporting earnings of 74 cents per share beating the Zacks consensus by a solid dime on quarterly sales of $8.72 billion which easily surpassed the $8.40 billion expected. Same-store sales of +11% overall was another strong element of the quarter, outpacing the +7.1% expected, with North America growing +12% and China +3% — its first positive comp in two years. Shares are -2.3% in late trading.
And Ford (F - Free Report) also handily beat expectations on both top and bottom lines — earnings of 63 cents per share on sales on $39.89 billion zoomed past the 40 cents per share and $36.80 billion expected, respectively — on surprisingly high adjusted EBITDA of +8.1% (+6.7% expected). The company also posted $693 million in free cash flow for the quarter, with its EV unit expected to lose $3 billion for the full fiscal year. Ford shares are down -2.5% on the news.
So all three of these cited firms reporting positive surprises but seeing their shares prices take a hit would appear to be something more than simple disappointment with a few line items: market participants would instead be looking to hedge against disappointing news from the Fed tomorrow at the end of its Federal Open Market Committee (FOMC) meeting. And that news, as stated above, would be the lack of remediation on behalf of Fed Chair Jay Powell in saying future rate hikes are off the table. We don’t expect the Fed to conclude this based on the various economic components presently available.
Image: Shutterstock
Markets Swing Lower Ahead of Fed Rate Decision; AMD, SBUX, F Beat Earnings
It was a profound swoon with which we began today’s trading; we opened across indices in the red, but swung to session lows by 11am ET. JOLTS data on U.S. job openings — the first of several domestic employment reports this week — posted its first sub-10 million level in two years (following a prior month’s upward revision), and Factory Orders rebounded, but not as high as expected, to +0.9%. But the specter of a pending Fed funds rate increase, possibly without a clear message that the rate hikes are over, looms larger than these metrics.
The Dow had sunk lower than -600 points this morning, but closed well off those lows: -364 points, -1.08%. The Nasdaq gave up an identical -1.08%, -132 points on the day. The S&P 500, on a day in which it saw all 11 sectors finish in negative territory today, -1.16%, while the small-cap Russell 2000 closed with nearly twice the amount of losses as the other indices on the day, -2.10%. The Russell is once again negative, year to date, while the other indices hang onto gains.
Advance Micro Devices (AMD - Free Report) posted numbers that soundly outperformed Q1 expectations after today’s close: earnings of 60 cents per share outpaced the Zacks consensus by 4 cents, on quarterly sales of $5.35 billion, which improved on the projections though still came in lower by negative high single digits. This marks the fourth earnings positive surprise in the past five quarters.
Non-GAAP gross margins of +50% were just as expected, while Data Center revenues of $1.295 billion was light of estimates. The company sees Q2 sequential growth in Data Center and Client segments, offset by slightly lower forecasts in its Gaming and Embedded segments, and consequently is seeing its shares down -4.5% in the after-market session, following a very strong +38% share price hike year to date.
Starbucks (SBUX - Free Report) also outperformed expectations in its fiscal Q2 this afternoon, reporting earnings of 74 cents per share beating the Zacks consensus by a solid dime on quarterly sales of $8.72 billion which easily surpassed the $8.40 billion expected. Same-store sales of +11% overall was another strong element of the quarter, outpacing the +7.1% expected, with North America growing +12% and China +3% — its first positive comp in two years. Shares are -2.3% in late trading.
And Ford (F - Free Report) also handily beat expectations on both top and bottom lines — earnings of 63 cents per share on sales on $39.89 billion zoomed past the 40 cents per share and $36.80 billion expected, respectively — on surprisingly high adjusted EBITDA of +8.1% (+6.7% expected). The company also posted $693 million in free cash flow for the quarter, with its EV unit expected to lose $3 billion for the full fiscal year. Ford shares are down -2.5% on the news.
So all three of these cited firms reporting positive surprises but seeing their shares prices take a hit would appear to be something more than simple disappointment with a few line items: market participants would instead be looking to hedge against disappointing news from the Fed tomorrow at the end of its Federal Open Market Committee (FOMC) meeting. And that news, as stated above, would be the lack of remediation on behalf of Fed Chair Jay Powell in saying future rate hikes are off the table. We don’t expect the Fed to conclude this based on the various economic components presently available.
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