Sunday, October 2, 2022

Stocks rally ahead of Fed decision; Microsoft shares upbeat guidance

Stock market indices traded higher on Wednesday morning ahead of the Fed’s rate-cutting policy, fueled by upbeat earnings and guidance from software giant Microsoft.


At 10:30 a.m. ET, the Nasdaq was up 2.1%, while the S&P was up 1.6% and was close to reclaiming its 200-day line. The Dow Jones Industrial Average was up 1% and the small-cap Russell 2000 was up 1.1%.

The two-day Fed meeting ended with a policy announcement due Wednesday at 2 p.m. ET. There is some speculation that Fed policymakers may accelerate bond tapers again. This would signal an even sharper turnaround for the Fed to hike rates in the coming months.

Fed chief Jerome Powell will give his customary post-meeting news conference at 2:30 p.m. ET. His remarks are important in understanding how aggressive the central bank will be in the coming months.

Microsoft earnings and guidance drive stock market growth

Microsoft (MSFT) rose 4.3% after an initial jump of 308. Microsoft is now back above its long-term 200-day moving average. Other big names jumped at Microsoft’s earnings announcement.

Tesla (TSLA) grew by 3.5% from post-closure earnings, and Apple (AAPL) rose 1.9%. Apple is scheduled to release earnings on Thursday.

Microsoft earnings and revenue tops fiscal Q2 views.

US Stock Market Today Overview

index symbol Price profit loss % Change
Dow Jones (0DJIA) 34602.79 +305.06 +0.89
S&P 500 (0S&P5) 4417.86 +61.41 +1.41
Nasdaq (0NDQC) 13817.88 +278.58 +2.06
Russell 2000 (IWM) 201.03 +2.19 +1.10
IBD 50 (FFTY) 38.05 +0.78 +2.09
Last Updated: 11:42AM ET 1/26/2022

A long-term leader in the stock market

The Redmond, Wash.-based company earned $2.48 per share on sales of $51.7 billion in its fiscal second quarter ended December 31. Analysts expected Microsoft earnings of $2.32 per share on sales of $50.7 billion, according to FactSet. On a year-over-year basis, Microsoft’s revenue grew 22%, while sales grew 20%.

“Solid commercial execution, represented by strong booking growth driven by long-term Azure commitments, drove Microsoft Cloud revenue to $22.1 billion, up 32% year over year,” Chief Financial Officer Amy Hood said in a news release. “

Microsoft earnings and guidance are important to cloud-computing rivals like Amazon.Com (AMZN) and Google Parent Alphabet (GOOGL), as well as commercial software giants and even chip makers such as NVIDIA (NVDA), another long-term stock market winner.

Nvidia shares were up 3.8% on Wednesday morning. It was still up more than 25% from its 52-week high, but reclaimed its 200-day line.

The growth-stock-focused Innovator IBD 50 ETF (FFTY) was up 2.2%.

Texas Instruments (TXN) shares rose on Wednesday after the chipmaker crushed analyst targets for the fourth quarter and guided higher for the current period. TXN stock jumped 4.8% on the news. The Dallas-based company said late Tuesday that it earned $2.27 per share on sales of $4.83 billion in the December quarter. Analysts had forecast TI earnings of $1.95 per share on sales of $4.43 billion, according to FactSet.

F5 Network (FFIV) also reported late Tuesday night. F5 weeded out ideas, but directed less at 2022 revenue. F5 shares fell 11.4%, indicating a sell-off.

Hawkish Fed chief made big profit; Tesla Leads Earning Movers Late

Boeing chart analysis

Boeing (BA) taking another big charge early Wednesday reported huge losses, while revenue slid despite being cash flow positive. The Dow Jones aerospace giant did not provide any financial guidance for 2022, but is ramping up 737 MAX production. BA’s stock fell 2.5% in morning trading.

Boeing stock is trading below its downtrend 50-day moving average. The stock has been unable to conduct a sustained campaign above that level of resistance since April last year. But investors should keep an eye on Boeing stock as it is currently in very long consolidation with 278.67 buy points, according to MarketSmith analysis.

AT&T (T) The stock rose quickly but soon faded to a loss of 2.7%. The telecom giant on Wednesday reported fourth-quarter earnings and revenue that topped estimates, while the 2022 revenue outlook beat expectations. For the quarter ended December 31, AT&T earned 78 cents per share on an adjusted basis, up nearly 4% from a year ago. Revenue, including the divestiture of satellite TV firm DirecTV, fell 10% to $41 billion, but was seen at the top.

Abbott Laboratories (ABT) reported adjusted earnings of $1.32 per share on $11.47 billion in fourth-quarter sales. In response, ABT’s stock declined. Analysts polled by FactSet expected the medical giant to earn $1.21 per share on average sales of $10.71 billion. COVID tests generated $2.3 billion in fourth quarter sales.

Follow Michael Molinsky on Twitter @IMmolinski

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