$MSFT magic fades? Record earnings, falling price?
Is elephant riding a mobile device strange?
Did you find it “strange” that the US market fell on Tue, 30 Jan 2024?
Honestly, I was not that fazed by it because it was the start of the FOMC meeting, and the first in 2024.
If you have been following past Fed’s FOMC meetings, you would have noticed that the market tends to be jittery as the FOMC meeting convenes.
It remains volatile until after the 2nd day press conference in the afternoon.
Thereafter, depending on how Wall Street chooses to interpret Chairman Jerome Powell’s explanation - the market will act out correspondingly.
That being said, I was caught off-guard that the official reports out did nothing to calm the market: (see below)
Jobs Opening and Labour Turnover surveys (JOLTs) for December 2023.
CB Consumer Confidence report for January 2024.
JOLTs report.
Despite forecasts of a decline, job openings surprised on the upside, hitting 9.03 Million, exceeding both estimates and the revised November figure.
This indicates sustained demand for labor, reflecting the ongoing tight labour market.
At the same time, there was a modest dip in hiring compared to November, with 5.6 Million hires.
This could suggest a slight cooling off in the pace of new job creation.
Quits and layoffs remained relatively unchanged, highlighting continued worker confidence and low job insecurity.
Consumer Confidence report.
US January 2024, latest CB Consumer Confidence report painted a surprisingly bright picture, showcasing the highest reading since December 2021.
The index jumped to 114.8 (base year 1985=100), exceeding both (a) analysts' expectations (115.0) and (b) previous month's reading (108.0).
This marks the 3rd consecutive month of gains, signaling a growing optimism among consumers.
By the time market closed:
DJIA: +0.35% (+133.86 to 38,467.31).
S&P 500: -0.06% (-2.96 to 4,924.97).
Nasdaq: -0.76% (-118.15 to 15,509.90).
On Tue, 30 Jan 2024, $Microsoft(MSFT)$ released its Q2 2024 earnings after US market has closed for the day.
As per my post on 30 Jan 2024 ($MSFT Tops Earnings Week. US Market Cheers! - click to read ! ), the software maker issued fiscal second-quarter results that outperformed analysts’ estimates and a light quarterly revenue outlook.
Below is Microsoft’s quarterly results, compared with consensus among analysts polled by LSEG, formerly known as Refinitiv:
Earnings: $2.93 per share, vs. $2.78 per share expected.
Revenue: $62.02 Billion, vs. $61.12 Billion expected. It is also +17.6% YoY.
Q3 2024 Revenue: Microsoft called for revenue between $60 Billion & $61 Billion, or $60.50 billion at the middle of the range.
Analysts polled by LSEG had expected $60.93 Billion.
Despite handing in a stellar report card, Microsoft closed mixed.
It fell marginally by -0.28% to close off Tuesday at $408.59 per share. (see above)
In extended trading, shares moved as much as -2% lower.
Heading into Wednesday trading, US market remains jittery (in the morning) — dragging Microsoft along.
My viewpoints: (mine & mine only)
I think the Fed will keep interest rate status quo on Wed, 31 Jan 2024.
CME Fedwatch tool has a 97% probability that interest rate remains unchanged. (see above)
I do not think interest rate cut is on the card, either.
It is just too soon, given that only December 2023’s Core PCE was under 3.0%.
However, US central bank has been under a lot of pressure from US senators. (see above)
4 Senators - Elizabeth Warren, John Hickenlooper, Jacky Rosen and Sheldon Whitehouse have written to Fed chairman, Mr Jerome Powell.
The letter urged Central Bank to (a) consider the effects of elevated interest rate on the housing market and (b) to reverse the troubling rate hikes that have put affordable housing out of reach for too many.
With all the data available, quite certain the Fed knows what they are doing.
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Do you think the Fed will cut interest rate sooner or later ?
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