Morning Minutes

Stocks Digest Earnings and Economic Reports Ahead of the Fed




The strong finish to January that saw US indices climb 1.0%-1.7% yesterday continued overnight with the Hang Seng gaining 1.0%. Momentum has faded this morning, however, with the Dax up 0.3% and the FTSE up 0.2%, while US index futures are down 0.1% to 0.4%.

The start of a new month has brought a lot of economic news for investors to consider. Manufacturing PMI reports from around the world have generally been coming in better than expected with Australia, the UK, Germany and Spain beating expectations so far. Canadian Manufacturing PMI  (street 49.4) is due at 9:30 am EST, followed by US ISM Manufacturing PMI (street 48.0) at 10:00 am EST.

Today’s US ADP payrolls report was mixed with a disappointing headline number (106K vs street 178K), part of which was blamed on winter weather disruptions, partially offset by an upward revision to December payroll growth (253K up from 235K). US Construction Spending is due at 10:00 am EST (street 0.0%).

The main event investors appear to be waiting for is today’s 2:00 pm US interest rate decision. Like the Bank of Canada last week, the Fed is widely expected to slow the pace of rate hikes to 0.25% (to 4.75% from 4.50%) from 0.50% last meeting. Investors may focus more on the statement for hints of whether the Fed is ready to pause rate hikes like the Bank of Canada did, and if it does plan to continue tightening, for how much longer or higher.

Overnight earnings reports have been mixed as well. Positive earnings from AMD ($0.69 vs street $0.67, up 3.2% premarket) and better than expected sales from Peloton ($792M vs street $709M, up 6.0% premarket), have been countered by disappointments from Electronic Arts ($0.73 vs street $3.08, down 9.1% premarket), Snap (-$0.18 vs street -$0.11 down 13.0% premarket), Match Group ($0.30 vs street $0.46 down 8.3% premarket) and Western Digital (-$0.42 vs street -$0.15, down 3.0% premarket). In the wake of last night’s social media company struggles, Meta Platforms reports results after the close today.     

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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