Fed Remarks on Interest Rates, Jobs Data & Market Activity: What Investors Need to Know
By The markets are abuzz with activity in the wake of the latest Fed remarks from Chairman Jerome Powell.[0] At the Senate Banking Committee on Tuesday, Powell declared that the Federal Reserve was prepared to quicken the rate of rising interest rates if the data suggested that it was necessary to contain inflationary pressures.[1] This has led to speculation that the Federal Open Market Committee (FOMC) could impose a full 50 basis point rate hike at its next meeting in two weeks, scheduled for March 21-22, 2023. Markets are now factoring in a 50 basis point rate hike at the next FOMC meeting and the market’s targeted terminal rate expectation has now jumped to between 5.50% and 5.75%.
Meanwhile, the job market remains robust, as evidenced by the most recent jobs data. The Labor Department said Thursday that initial jobless claims rose by 21,000 to 211,000 during the week ending March 4.[2] Additionally, the ADP National Employment Report showed 242,000 private-sector jobs added vs. the 200,000 projected.[3] The still-high number of available jobs suggested the labor market remains extremely strong.
In terms of stocks, United Natural Foods (UNFI) plunged more than -28% after reporting Q2 adjusted EPS well below the consensus and cutting its full-year adjusted EPS forecast. [4] Following the announcement of Q4 earnings per share that were significantly lower than expected, Brown-Forman experienced a drop of more than -2%.[5] Tesla (TSLA) and Edwards Lifesciences are down more than -1% after being downgraded.[5] Meanwhile, Shoals Technology (SHLS) gapped down 8.6% in heavy volume after the solar company announced a 24.5 million-share secondary offering of common stock at 24.70 each.[3] On the positive side, Crowdstrike Holdings Inc (NASDAQ:CRWD) gained more than 3% after the cybersecurity firm reported better-than-expected quarterly results.[6] A regulatory filing showed that between March 3 and March 7, Berkshire Hathaway purchased 5.8 million shares of Occidental Petroleum (OXY), causing the stock to rise by more than +2% in pre-market trading.[5]
Investors will be looking to the upcoming Labor Department’s nonfarm payrolls report, due Friday morning, for clues on the strength of the labor market and its implications for the Fed’s interest rate policy.
0. “Stocks Mixed As Powell Softens His Tone” Barchart, 8 Mar. 2023, https://www.barchart.com/story/news/14905134/stocks-mixed-as-powell-softens-his-tone
1. “Dow opens 100 points higher as Wall Street braces for Friday's jobs report: Live updates” CNBC, 9 Mar. 2023, https://www.cnbc.com/2023/03/08/stock-market-today-live-updates.html
2. “Nasdaq, S&P, Dow rise after an increase in jobless claims” Seeking Alpha, 9 Mar. 2023, https://seekingalpha.com/news/3945821-nasdaq-sp500-dow-jones-stock-market-interst-rates
3. “Stock Market Closes Mixed; Beige Book Data Shows Resiliency” Investor's Business Daily, 8 Mar. 2023, https://www.investors.com/market-trend/stock-market-today/stock-market-volatile-on-powell-comments-jack-daniels-parent-stock-sells-off
4. “Dow ends slightly lower, stocks finish mixed as higher Fed rate risk, upcoming jobs data worry Wall Street” MarketWatch, 8 Mar. 2023, https://www.marketwatch.com/story/u-s-stock-futures-unable-to-rebound-from-latest-sell-off-as-more-powell-talk-looms-8c9714e9
5. “Markets Today: Stock Indexes Slightly Higher as Bond Yields Fall” Barchart, 8 Mar. 2023, https://www.barchart.com/story/news/14882609/markets-today-stock-indexes-slightly-higher-as-bond-yields-fall
6. “Stock market today: Dow slips on Fed fears after fresh signs of tight labor market By Investing.com” Investing.com, 8 Mar. 2023, https://www.investing.com/news/stock-market-news/stock-market-today-dow-slips-on-fed-fears-after-fresh-signs-of-tight-labor-market-3025453
