Another trading session, another bloodbath. Aside from Monday’s grace period, where we saw green across the board at the closing bell, market sentiment returned to Friday’s heavy sell-off, where the Dow dropped 980 points on the day. Today, the Dow closed at its session low: -809 points, -2.38% — and it was the best-performing major index on the day.
The S&P 500 is on track for its worst month since 2020, as the wider index dropped -2.82% on the day. The Nasdaq is currently experiencing its worst month since October 2008, -3.95% on the day or -514 points, pulled down partly by
Tesla’s
TSLA
-12% drop as its CEO utilizes some shares for his purchase of
Twitter
TWTR
. The small-cap Russell 2000 also had a rough day, -3.11%.
It would appear we’re once again pricing in something like a worst-case scenario a week ahead of the Fed meeting on monetary policy. Markets had been pricing in a 50 basis-point hike on May 4th, but with market participants increasingly concerned about the inability for the Fed to tame inflation with a half-point raise, talk is now we might see 75 basis points. And if that happens, we might expect a bumpy economic landing over the coming weeks and months.
You’ll recall we saw much of the same thing in mid-March, ahead of the 25 basis-point hike the Fed brought about: fears for 50 bps, plus an aggressive manner of draining the $9 trillion balance sheet (which did not happen at the last meeting), sent indexes tumbling into the meeting. Once it was over, markets zoomed higher. Should we see the same dynamic in play this time, it will be like “Deja vu all over again,” to quote New York Yankee great, and accidental philosopher, Yogi Berra.
Microsoft
MSFT
outperformed expectation on top and bottom lines after the closing bell today, posting earnings of $2.22 per share on sales in the quarter of $49.36 billion, which improved on the $2.18 and $48.96 billion, respectively. It’s cloud-based Azure business growth can in at +46% — still a magnificent number, although we clearly see this growth slowing a bit. Shares sold off on the news, but are currently +2.2% in late trading.
Google parent
Alphabet
GOOGL
missed expectations on its bottom line while slightly beating on the top. Earnings of $24.62 per share was more than $1 below the $25.70 in the Zacks consensus, and lower than the $26.29 per share in the year-ago quarter. Sales in the quarter, subtracting traffic acquisition costs (TAC) which the company does not account for on the headline, reached $56.02 billion from an estimated $55.99 billion for a slight beat. Shares are down -4.85% on the earnings miss; -18% year to date.
Chipotle Mexican Grill
CMG
also put up slight beats on both top and bottom lines for its Q1 results, with earnings of $5.70 per share outpacing estimates by a nickel on $2.02 billion in revenues which eked out a win over $2.01 billion expected in the Zacks consensus. Same-store sales grew +9% year over year, with now +41.9% of Chipotle sales now coming from digital. Margins were slightly below expectations on higher input costs. Shares are flat on the news, but -5% during today’s lousy regular session.
Visa
V
posted yet another earnings beat — it’s one outstanding chart: zero earnings misses going back to its 2008 IPO — by posting earnings of $1.79 per share versus $1.65 expected, on sales of $7.2 billion from $6.8 billion in the Zacks consensus, +25% year over year. Both payment and cross-border volumes came in stronger than anticipated. Shares are +5% in late trading, but still down -9% year to date.
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