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Coffee With Greta: March Cut Hopes Dashed

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DJIA Futures: +17 (+0.04%)

SPX Futures: +20 (+0.4%)

NASDAQ Futures: +100 (+0.6%)

Good morning friends!

Futures are higher as traders digest the first Fed decision of the year and await big tech earnings after the close.

Let’s get right to it!

Yields Fall After Fed Decision

Treasury yields are falling this morning as the market digests the first Fed decision of 2024. 

The 10-year yield is down two basis points at 3.90% while the 2-year yield is down one basis point at 4.20%. 

The Federal Reserve threw cold water on traders’ hopes for a March rate cut on Wednesday. 

The Federal Open Market Committee kept the federal funds rate in a range of 5.25% to 5.5% as expected.

In its statement, the FOMC said, “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”

The statement did remove language about  “any additional policy firming that may be appropriate”, which was a key change for shifting policy ahead.

But Chairman Jerome Powell said in his press conference, “Based on the meeting today, I would tell you that I don’t think it’s likely that the committee will reach a level of confidence by the time of the March meeting to identify March as the time to do that. But that’s to be seen.”

CME Group’s FedWatch Tool now shows nearly 61% of traders expecting the first 25bps rate cut at the May 1 meeting.

Qualcomm Slips On Weak Guidance

Qualcomm (QCOM) shares are down 2.1% ahead of the open after beating fiscal Q1 expectations but issuing soft guidance. 

Here’s how the chipmaker’s results compared to analysts’ estimates: 

  • Adjusted EPS: $2.75 vs $2.37 expected
  • Revenue: $9.92 billion vs $9.51 billion expected

Net income jumped 24% year over year. 

The company said it shipped $6.69 billion in smartphone chips during the quarter, up 16% from a year ago. 

Qualcomm forecast fiscal Q2 adjusted EPS between $1.73 and $1.93 on revenue of $8.9 billion to $9.7 billion. 

Analysts’ were forecasting EPS of $2.25 on $9.3 billion in revenue. 

Peloton Tumbles On Mixed Results, Bad Outlook

Peloton (PTON) shares are plunging 10.1% in premarket trade after reporting mixed fiscal Q2 results and issuing weak guidance. 

Here’s how the fitness equipment maker’s results compared to analysts’ estimates: 

  • Loss per share: $0.54 vs $0.53 expected
  • Revenue: $743.6 billion vs $733.5 million

For fiscal Q3, Peloton forecast sales between $700 million and $725 million vs $754 million expected. 

The company expects an adjusted EBITDA loss of $20 million to $30 million vs expectations for a $2 million loss. 

The CFO said, “Our outlook is tempered by uncertainty surrounding our ability to efficiently grow Paid App subscribers and the performance of other new initiatives, as well as an uncertain macroeconomic outlook.”

More MAG7 Earnings Ahead

Today will be a big day of earnings for traders after the market closes. 

The rest of the Magnificent 7 stocks are scheduled to report after-hours with Apple (AAPL), Meta Platforms (META), and Amazon (AMZN). 

Focus is on these results after Microsoft (MSFT) and Alphabet (GOOGL) reported earlier this week. 

Apple’s results will be released at 4:30 p.m. ET with the conference call at 5:00, the stock’s implied move is 5%. 

Meta’s report will be out at 4:15 p.m. ET with the earnings call at 5:00, the stock’s implied move is 11.8%. 

Amazon’s report will be released right as the market closes at 4:00 p.m. ET with the conference call at 5:30, the stock’s implied move is 7.2%.

Weekly Jobless Claims Climb To 3-Month High

Weekly jobless claims rose more than expected last week in a possible sign of a softening labor market. 

The Labor Department reported 224,000 Americans filed initial claims for unemployment benefits last week. 

That was up by 9,000 from the previous week and higher than 214,000 expected. 

It was also the highest total in nearly three months. 

Continuing claims rose by 70,000 to 1.9 million in the week ending January 20.

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