The Fuse
Equity futures are modestly higher this morning after taking a beating yesterday. The 1% loss on Tuesday may have been negligible but it pushed markets back from the top of the range. Volatility is likely to expand over the next few sessions.
Interest Rates are falling slightly as the bond market prepares for a potential shift in Fed policy. On the whole, the market has been preparing for the end of the Fed tightening cycle for months.
Very positive news from Eli Lilly about their alzheimer’s drug meeting important end points. Gold is slightly higher but crude oil is getting hammered, now below $70 a barrel.
Strong earnings last night from Starbucks but the stock has hit some profit taking. AMD beat but offered poor guidance, Caesar’s beat and Ford posted a profit and backed their full year guidance.
Today is the big Fed decision day, markets are looking for a rate hike (85% chance now), but it’s the press conference where all of the excitement occurs.
Terrible breadth on this Tuesday session but it improved as the day wore on. Markets improved off their worst levels of the day.
Very heavy selling surges started the day while poor economic data contributed to the onslaught of selling pressure.
We have now seen the power of resistance. Markets hit the ceiling on Monday and were soundly rejected yesterday. This places the market in a precarious position, relying on certain words from the Fed and perhaps a soothing word from Apple tomorrow night.
The Internals
What’s it mean?
A solid down day with the VOLD straight down all session long. The vix nearly hit 20% yesterday, something we talked about recently but did back off the highs of the session. We nearly had a trend down day, but make no mistake there was plenty of selling and worry. Put/calls were elevated on the day.
The Dynamite
Economic Data:
- Wednesday: FOMC rate decision, ISM non- manufacturing index,, ADP employment change.
- Thursday: jobless claims, challenger job cuts, productivity and unit labor cost for Q1 2023.
- Friday: NFP labor report, consumer credit.
Earnings this week:
- Wednesday: BG, CVS, EL, HBI, KHC, YUM, EQIX, FSLY IR, KLIC, NUS QRVO, QCOM SYNA OLED
- Thursday: CAH, SHK, MLM, VMC, K, RACE, ICE, IDCC, AMNY, AAPL, SQ, CRUS, COIN, DASH, DBX, EXPE, FTNT LYFT, SHOP, MIS
- Friday: AMC,. CBOE, CHNI, ROAD, WBD
Fed Watch:
Issues and Stocks to Watch this week:
Apple – Releases earnings on Thursday evening, it may trigger some big market movements.
First of the month – money flows are often strong to start the month.
The Fed meeting – Plenty of hot inflation data, too much for the committee at this point, looking for another hike or two to come.
