The Fed made its move - but markets priced in a recession already. Here's what to know.
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Phil Rosen
Jul 28, 2022, 18:10 IST
The Federal Reserve, led by Jerome Powell, raised interest rates earlier this month.Samuel Corum/Getty Images
75 basis points.
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That's the whole intro.
Phil Rosen here. After yesterday's Fed hike, I'm breaking down why markets may be able to withstand what happens next.
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1. The Federal Reserve announced a 75-basis-point interest rate hike. It mirrored the previous hike, matched the consensus expectation, and added to concerns that the Fed may put the US economy into a recession.
But even amid the Fed's aggressive tightening and the weak economic data of late, the worst of the volatility and risk in the stock market has come and gone, according to JPMorgan's Marko Kolanovic.
Plus, recent revisions to earnings show the market is reflecting much of the cyclical weakness, he added.
And earnings reports from Alphabet and Microsoft fit into JPMorgan's thesis. Shares of the tech giants rose after each showed resilience and strong guidance for the upcoming fiscal year.
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"This will be bullish guidance heard around the world and on the Street as the market digests this positive commentary in a darkening macro," Wedbush's Dan Ives said, in reference to Microsoft's results.
In other news:
2. US stock futures fall early Thursday, as investors brace for the first reading on US second-quarter GDP, which is due later today. Meanwhile, bitcoin traded above the $23,000 level. Here are the latest market moves.
3. On the docket: Apple Inc., Amazon, and Pfizer Inc., all reporting. Plus, look out for the unemployment insurance weekly claims report, expected from the US Department of Labor this morning.
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4. Home prices may be sliding, but these two experts with 35 years of collective experience explain why it's a great time to get into the market. Not only does the current landscape present an opportunity to buy a property, but it can even allow investors to negotiate on their own terms.
8. A portfolio manager who's crushing the S&P 500 broke down why renewable energy stocks are poised to defy the bear market. Low costs, strong pricing power, resilient demand, and a structural shift toward clean energy all give the sector promising momentum, the Ecofin manager said. These are his eight top stock picks.
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9. Even with the softening housing market, international investors continue to scoop up pricey homes in Florida, California, and Texas. A 2008-style housing crash is unlikely, according to a top analyst at the National Association of Realtors — here are four reasons why.
10. Meta reported its first year-on-year revenue decline. Revenue in the second quarter fell almost 1% from a year earlier. Meta also issued a dissapointing third-quarter forecast, citing a "weak advertising demand environment." Shares in the company dropped more than 4% after hours. It comes as the FTC sued Meta to block it from acquiring virtual-reality company Within Unlimited.
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Edited by Jason Ma in Los Angeles and Hallam Bullock (@hallam_bullock) in London.
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