Coffee With Greta: Fed Hangover Weighs on Stocks
DJIA Futures: -238 (-0.7%)
SPX Futures: -38 (-1%)
NASDAQ Futures: -141 (-1.3%)
Good morning friends!
Futures are falling after the Fed seemed to strike down market expectations for a pivot in the near future.
Let’s get right to it!
Fed Dashes Hopes for a Pivot
The Federal Open Market Committee approved its fourth consecutive 75bps rate hike on Wednesday.
That puts the Federal Funds Rate in a range of 3.75% to 4%, the highest level since January 2008.
The FOMC statement also seemed to hint at the bank slowing the pace of its tightening.
The Fed said it “will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments” when determining future rate hikes.
But Chairman Jerome Powell maintained his hawkish tone in the post-meeting press conference, saying inflation is still well above target and the bank will “stay the course until the job is done”.
Powell told reporters he doesn’t think they have overtightened and it is “very premature to think about pausing rate hikes”.
CME Group’s FedWatch Tool shows 52% of traders expecting a 50bps rate hike at the December meeting with 48% anticipating another 75bps move.
Bank of England Approves Large Rate Hike
The Bank of England followed the Fed’s lead overnight, hiking its benchmark interest rate by 75 basis points.
That’s the largest hike in 33 years and the eighth in a row.
U.K. inflation spiked to 10.1% in September and is expected to rise to 11% in Q4.
But the economy is also slowing.
U.K. GDP is projected to decline 0.75% in the second half of 2022 and continue falling throughout 2023 and early 2024.
Weekly Jobless Claims Dip
Weekly jobless claims dipped in late October as the labor market maintains strength in the face of the Fed’s inflation fight.
The Labor Department reported 217,000 Americans filed initial unemployment claims last week.
That was down 1,000 from the week before and better than expectations for an increase to 220,000.
Continuing claims rose by 50,000 to 1.49 million in the week ending October 22.
Roku Plummets on Outlook
Roku (ROKU) shares are plunging 21% ahead of the open despite beating Q3 expectations.
Here’s how the streaming platform’s results compared to analysts’ expectations:
- Loss per share: $0.88 vs $1.29 expected
- Revenue: $761.4 million vs $696.1 million expected
But Roku’s Q4 forecast came in weak, dragging the stock down.
The company expects revenue of $800 million this quarter and an adjusted EBIDTA loss of $135 million.
That would mark a decline of 8% year over year and missed analysts’ estimates of $899 million in revenue and an adjusted EBITDA loss of $48 million.
The stock is on track to open at a new 52-week low.
Qualcomm Issues Weak Guidance, Announces Hiring Freeze
Qualcomm (QCOM) shares are falling 8.1% in premarket trade after reporting fiscal Q4 results that were in line with expectations and weak Q1 guidance.
Here’s how the chipmaker’s results compared to analysts’ estimates:
- Adjusted EPS: $3.13, as expected
- Revenue: $11.39 billion vs $11.37 billion expected
Revenue was up 22% year over year.
Qualcomm forecast fiscal Q1 adjusted EPS of $2.25 to $2.45 on $9.2 billion to $10 billion in revenue.
That was weaker than analysts’ estimates for adjusted EPS of $3.42 on $12.02 billion in revenue.
The company also announced it implemented a hiring freeze at the start of the current quarter due to macroeconomic headwinds.
Peloton Collapses on Weak Outlook
Peloton (PTON) shares are plunging 15.4% ahead of the open after missing Q3 estimates and issuing weak guidance.
Here’s how the exercise device maker’s results compared to analysts’ estimates:
- Loss per share: $1.20 vs $0.64 expected
- Revenue: $616.5 million vs $650.1 million expected
Revenue fell 23% compared to a year ago.
The company lost members during the quarter, reporting 6.7 million total members vs 6.9 million in Q2.
But its free cash flow continued to improve to negative $246.3 million vs negative $411.9 million in Q2.
Peloton forecast Q4 revenue between $700 million and $725 million.
That would mark an increase from Q3 but was sharply lower than analysts’ estimates of $874 million.
The company said, “Given macro economic uncertainties we believe near-term demand for Connected Fitness hardware is likely to remain challenged.”
Moderna Tumbles After Q3 Miss
Moderna (MRNA) shares are tumbling 8.3% in premarket trade after missing Q3 expectations and lowering its full-year guidance for Covid vaccine sales.
Here’s how the pharmaceutical giant’s results compared to analysts’ expectations:
- Adjusted EPS: $2.53 vs $3.29 expected
- Revenue: $3.36 billion vs $3.53 billion expected
Revenue was down 32% year over year while profits plunged 68%, due to lower Covid vaccine sales.
Moderna now expects $18 billion to $19 billion in revenue from the vaccine this year, down from previous guidance for $21 billion.
Key Earnings After the Close
Here are the key companies scheduled to report Q3 results after the close today:
- Starbucks (SBUX)
- PayPal (PYPL)
- Block (SQ)
- DoorDash (DASH)
- Coinbase (COIN)