Bullard says he is leaning toward another three-quarters-of-a-point hike
St. Louis Fed president James Bullard told the Wall Street Journal on Thursday that he “would lean toward” a three-quarters-of-a-percentage-point rate hike next month.
The Fed has done hikes of that size at each of its past two meetings, the biggest increases in more than two decades. Market expectations are currently split between a half-point hike and a three-quarters-of-a-point hike for the September meeting.
Bullard told the Journal that “we’ve got a long way to go to get inflation under control” and that “I don’t really see why you want to drag out interest rate increases into next year.”
Bullard is seen as one of the more hawkish members of the Federal Open Market Committee, which votes on the central bank’s policy rate.
—Jesse Pound
Cisco headed for best day since 2020
Wall Street cheered Cisco‘s stronger-than-expected results, putting the stock on pace for its biggest one-day gain since Nov. 13, 2020 — when the stock popped 7.1%.
The stock last traded higher by 6%. It also hit its highest level since May.
—Fred Imbert, Ashley Capoot
Kohl’s CEO says company not worried about cash flow despite shrinking margins
Michelle Gass, the CEO of Kohl’s, told CNBC’s Courtney Reagan on “The Exchange” that the company is confident in its dividend and stock buyback program despite the retailer cutting its guidance.
“This is a short-term thing. As you look forward, our cash flow will be absolutely fine over time,” Gass said.
The company’s redesign of its stores to include retail space for Sephora is part of the short-term impact on cash flow, Gass said.
Shares of retailer are down 6% on the session.
— Jesse Pound
Expect low volume and volatility ahead, B. Riley’s Hogan says
Investors should anticipate volatility ahead as one of the lowest volume weeks of the year kickstart on Monday, said Art Hogan, chief market strategist at B. Riley Financial.
“Next week is likely going to be the lowest volume week of the summer as we unwind through the dog days of summer,” Hogan said. “Lower volumes tend to add volatility so don’t be surprised if markets get choppy.”
The shift isn’t unusual as traders venture out on vacation and economic reports and earnings season slowdown. September is generally regarded as a historically weak month for stocks.
— Samantha Subin
Semiconductor stocks rise, On Semiconductor jumps 8%
Semiconductor stocks rose on Thursday, pushing the S&P 500’s information technology sector higher. Shares of Broadcom, Nvidia, Micron and Applied Materials jumped more than 2% each, while ON Semiconductor soared 8%.
— Samantha Subin
Wolfspeed soars 28% on strong earning results
Shares of Wolfspeed surged 28% after topping revenue estimates in the recent quarter. The semiconductor company also posted a smaller-than-expected loss per share and shared better guidance than anticipated for the current quarter.
Wolfspeed reported a loss of 2 cents per share on $229 million in revenue for its fiscal fourth quarter. Analysts had anticipated a loss of 10 cents per share on $208 million in revenue.
JPMorgan’s Marko Kolanovic sticks to bullish market view
Marko Kolanovic
Crystal Mercedes | CNBC
JPMorgan strategist Marko Kolanovic stuck to his bullish market stance Thursday, noting that the S&P 500 is now closer to his year-end target of 4,800 than to the “most common ‘bearish’ price target” of 3,500.
“While this was an out of consensus view, we are again out of consensus and maintain that inflation will
resolve on its own as distortions fade,” Kolanovic said in a note to clients. He also pointed out that buying the dip this year has “yielded positive returns and has worked better, than e.g. suggestions to stay out of the market and start ‘nibbling’ at 3500 or 3300, levels that have not been reached.”
The strategist has been one of the most sanguine on the Street this year, even as the Federal Reserve raises rates to temp down inflationary pressures not seen in years.
His latest comments come as the market digests a sharp off a mid-June low. In that time, the S&P 500 is up more than 16%.
To be sure, Kolanovic said he suggests “not to buy the S&P 500 as a whole and we remain open to a possibility that the final S&P 500 price slightly underperforms our target.” Instead, he recommends looking at reasonably values parts of the market such as energy.
—Fred Imbert
Citi: Markets are seeing a message from the Fed that ‘simply is not there’
The Federal Reserve is more determined to bring down inflation than the market thinks, according to Citigroup.
As the market digests minutes released Wednesday from the Fed’s last meeting in July, Citi economist Andrew Hollenhorst thinks a popular interpretation that the central bank is getting ready to decelerate policy tightening is mistaken.
“Risk markets seem determined to read a dovish message into Fed communications that we think simply is not there,” Hollenhorst wrote Thursday. “A committee that values its ‘resolve’ in fighting inflation is unlikely to turn substantially more dovish so long as underlying inflation remains well above target and is not convincingly slowing.”
The minutes stated that Federal Open Market Committee members figured that after a series of rate hikes, “it likely would become appropriate at some point to slow the pace” of increases. But there was no specificity on when that might happen, and officials repeatedly stressed the importance of bringing inflation down to 2%.
Hollenhorst said he understands the market confusion, but noted that there “is not really any informational content” in the “at some point” phrasing.
Still, markets over the summer have priced in a more timid Fed when it comes to raising rates, even after consecutive 0.75 percentage point moves in June and July.
After wavering earlier in the week, futures pricing Thursday morning indicated a 66% chance of a half-point rate hike in September, according to CME Group data. Traders see another similar-sized move in November then a quarter-point increase in December. Rates are then expected to stay in a range of 3.5%-3.75%, with the first cut priced in near the end of 2023.
—Jeff Cox
Orange juice futures hit lowest level since July 28
Oranges hang on a tree at one of the Peace River Packing Company groves on February 01, 2022 in Fort Meade, Florida.
Joe Raedle | Getty Images
Orange juice futures hit 167 on Thursday. That’s the lowest level since July 28 when OJ futures hit 164. Since the start of the week, OJ is down nearly 7% and on pace for its worst week since July 15.
— Samantha Subin, Gina Francolla
Cisco shares jump on earnings beat, optimistic outlook
A sign bearing the logo for communications and security tech giant Cisco Systems Inc is seen outside one of its offices in San Jose, California, August 11, 2022.
Paresh Dave | Reuters
Shares of Cisco popped more than 6% after the company beat estimates for its fiscal fourth quarter.
The networking equipment producer also shared a better-than-expected outlook for the 2023 fiscal year as supply chain issues ease. Cisco said it expects revenue growth of 4% to 6%. That’s above estimates of 2.3%, according to analysts surveyed by Refinitiv.
— Samantha Subin, Jordan Novet
Bed Bath & Beyond tumbles 26%
Shares of Bed Bath & Beyond fell 26% on Thursday morning as investors reacted to activist investor Ryan Cohen’s filing that he intends to sell his entire stake in the meme stock.
The filing comes after Bed Bath & Beyond had surged in August amid abnormally high trading volume. It is unclear whether Cohen has already dumped his stock.
Bed Bath & Beyond said in its own filing on Thursday that it was “pleased to have reached a constructive agreement with RC Ventures in March” and was looking at potential changes to its financial structure.
“We have been working expeditiously over the past several weeks with external financial advisors and lenders on strengthening our balance sheet, and the Company will provide more information in an update at the end of this month,” the filing said.
— Jesse Pound
Existing home sales drop 5.9% in July
Existing home sales dropped 5.9% in July, the National Association of Realtors said Thursday in its monthly report. The drop brought the sales count to a seasonally adjusted annualized rate of 4.81 million units.
The findings also marked the sixth straight month of declines and the slowest pace in sales since November 2015, with the exception of a slight drop when the pandemic began. Sales also fell 20% from a year earlier.
— Samantha Subin, Diana Olick
BJ’s Wholesale shares pop on earnings beat
A customer pushes a shopping cart towards the entrance of a BJ’s Wholesale Club Holdings Inc. location in Miami, Florida.
Scott McIntyre | Bloomberg | Getty Images
Shares of BJ’s Wholesale jumped more than 8% after the company surpassed estimates on the top and bottom lines. The retailer posted earnings of $1.06 per share on revenues of $5.01 billion and upped its outlook for the year.
Bank of America upgraded the stock to a buy rating.
Stocks open flat
Stocks opened flat on Thursday, with the Dow last down 0.05%, or 17 points. The S&P 500 slipped 0.06%, while the Nasdaq Composite moved 0.23% lower.
— Samantha Subin
Verizon shares slip on downgrade
Pedestrians walk by a Verizon 5G sign in New York, April 3, 2021.
Scott Mlyn | CNBC
Shares of Verizon fell about 1.7% in premarket trading Thursday after MoffettNathanson downgraded the telecommunications company.
The firm moved its rating on Verizon to underperform from market perform and slashed its price target, citing competition in the industry that’s weighing on shares.
— Carmen Reinicke
Jobless claims fall for week ended Aug. 13
Initial jobless claims released Thursday dropped 2,000 to 250,000 for the week ended Aug. 13. Economists surveyed by Dow Jones had expected 260,000.
Estimates were also revised down to 252,000 for two weeks ago.
— Samantha Subin
Read More: Dow falls as Wall Street struggles to revive summer rally