Stocks climb as Fed rate-hike fears fade, with Apple on deck

Live3 updates

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  Thu, May 2, 2024 at 9:38 AM EDT

  Stocks rise after Fed holds rates steady, Apple earnings on deck

  Stocks rose on Thursday morning after a volatile trading session on Wednesday following the Federal Reserve’s policy decision.

  The S&P 500 (^GSPC) rose roughly 0.6% at the open. The Dow Jones Industrial Average (^DJI) gained 0.5%. The tech-heavy Nasdaq Composite (^IXIC) led the gains, up 0.8%.

  On Wednesday the Federal Reserve held rates unchanged. The fear of a possible rate increase instead of cuts had creeped into the markets recently. Investors were reassured by Fed Chair Jerome Powell’s commentary that the central bank was unlikely to hike rates.

  On the earnings front, Apple (AAPL) is set to report this afternoon. Shares of the iPhone maker opened roughly 1.5% higher on Thursday.

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  Thu, May 2, 2024 at 5:51 AM EDT

  Bring your macro notes to Apple’s earnings call tonight

  Most investors are bracing for a soft quarter from Apple (AAPL) this afternoon.

  To that end, shares are down 12% year to date versus a 5% gain for the S&P 500.

  Lots of focus on how economic challenges in the US and China are impacting mighty Apple. If these challenges prove more of an issue to sales, investors could refrain from getting too ecstatic on the inevitable AI talk on the earnings call.

  Helpful point from JP Morgan analyst Samik Chatterjee:

  “The sentiment [on Appl has improved despite tough datapoints as the focus has shifted to owning the potential AI upgrade cycle; however, the upcoming earnings print will still matter for investors in offering insights into the magnitude of the cyclical challenges on account of pressured consumer spending as well as the headwinds in relation to market share moderation in China.”

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  Thu, May 2, 2024 at 5:45 AM EDT

  The pushback on rate hikes from the Fed

  The Street is singing in unison this morning on a growing narrative in markets: the Fed may actually hike rates this year to finally bring inflation down to its 2% goal.

  That song is that pigs have a better chance of flying than the Fed whipping out a rate increase.

  Good point on all of this from Mike O’Rourke at Jones Trading this morning after Wednesday’s Fed decision:

  “Fear hype that chairman Powell would put rate hikes back on the table was ludicrous. If there was ever a straw man catalyst for a rally, this was it. The speculation was as inane as the belief at the start of the year that the FOMC would cut interest rates six times this year. There was nothing in the data or the Fed commentary supporting such easing speculation, but somehow it became the consensus view and was actually priced into markets. Chairman Powell has been adamantly clear on repeated occasions that if inflation is resilient, the FOMC will hold rates steady for as long as necessary to rein in inflation. Beyond risking overtightening as some decelerating economic data emerges, there is also an election in six months. Most obviously, this is a man who took the Fed’s balance sheet from $4 trillion four years ago to $9 trillion, then today said he is tapering normalization at $7.4 trillion. Chairman Powell is only hawkish when he has no other choice, and currently inflation is keeping him in check. Raising interest rates aggressively a year late does not make one tough on inflation.”