D&D Note (7.27.2022) ~ FED Raises Interest Rates by 75 Basis Points and Markets Take Off in Rally Mode ~ #stockmarket

D&D Note (7.27.2022) ~ FED Raises Interest Rates by 75 Basis Points and Markets Take Off in Rally Mode ~

Stocks begun the day in rally mode following the strong gains in Alphabet and Microsoft in last nights after-hours trading.

Both companies reported earnings after the bell yesterday and both actually missed earnings expectations, however offered positive guidance going forward allowing the stocks to rally.

This is a good sign and a classic sign the market is in the bottoming process when companies miss on earnings but still rally.

The FOMC raised interest rates by the expected 75 basis points. During the FED press conference markets took a big leg up and continued to rally into the close with the NASDAQ gaining over 4%.

FED Chair J. Powell said he thinks we are not in a recession right now because we have a robust job market and hinted that 2.5% is the nominal rate and likely to go to 3%.

Tomorrow we get the GDP print for the second quarter and is expected to be negative which would be two consecutive quarters of negative growth. This signal is not an official reading of wether or not we are in a recession.

Select Earnings coming up this week:

Thursday: Southwest, Amazon, Pfizer, Apple, Intel

Friday: P&G, Chevron, Exon Mobil, Colgate-Palmolive, Abbvie

The Space economy in 2021 grew at fastest pace in years to $469 billion.

The Senate passes the CHIPS-plus Act which will provide subsidies to American semiconductor companies to produce more chips here in the United States.

Stock Specific News:

Qualcomm beat on earnings after the bell but offered weak guidance for Q4 revenues and EPS, the stock fell 3% on initial results.

Ford reported after the bell and beats EPS estimates, the stock gained 4% on initial results.

Meta Platforms reported after the bell and missed 2Q revenue estimates, the stock fell 4% on initial results.

Chipotle Mexican Grill gained 16% after beating on earnings and UBS reiterated the stock as a buy.

Alphabet gained over 7% after showing strong year-over-year search revenue growth despite missing on earnings estimates last night.

Microsoft gained over 6% after issuing a positive income forecast for year ahead despite missing on earnings estimates last night.

Shopify rose 6% even though reporting disappointing earnings.

PayPal rose 11% on a report from the Wall Street Journal said activists investor Elliot Management took a stake in the company.

Teva Pharmaceutical surged 25% after reaching tentative settlement to pay $4 billion for alleged role in the opioid crisis.

Spotify gained 14% after reporting an increase in premiums subscribers despite worse-than-expected earnings report.

Hilton rose 5% after beating earnings estimates and raised its full-year earnings guidance.

Closing Markets (as of 1:15pm PST)

DOW up 1.37%

S&P 500 up 2.62% (4,023.61

NASDAQ up 4.06%

VIX down -5.79% to 23.26

2 Year Note down -5.38bp to 3.00%

10 Year Note down -0.92bp to 2.80%

Oil up 3.274% to $98.09 a barrel.

Gold up 0.844% to $1732.20 an ounce.

Bitcoin up 9.13% to $22,746.37

Ethereum up 15.53% to $1,594.45

~ Dave James / Principal Trader and Market Strategist