Daily Markets: Can the Fed Provide a Soft Landing for the Economy?

The big picture today

Asia-Pacific equity indices ended today’s session higher, with the exception of Hong Kong’s Hang Seng which fell 0.36%. India’s Sensex gained 0.06%, China’s Shanghai Composite rose 0.68% while Taiwan’s TAIEX and Australia’s ASX All Ordinaries rose 0.79% and 0.96%, respectively . Korean and Japanese markets are closed to mark Children’s Day, an ancient holiday that encourages respect for children’s personalities and celebrates their happiness. It’s the final celebration of Golden Week at large. By midday, major European equity indices are up across the board, while US futures point to a bear market opening later this morning.

Markets outside the US are mimicking yesterday’s rally in US stocks following the Fed’s monetary policy statement which apparently took the 75 basis point moves off the table. But the contraction in German factory orders in March and comments by European Central Bank board member Fabio Panetta that economic expansion has almost come to a standstill in the eurozone raise new questions. on the Fed’s ability to provide a soft landing for the economy. Additionally, Fed Chairman Powell said the Fed’s tools are primarily aimed at moderating demand and “don’t really work on supply shocks,” something to keep an eye on being given the sharp rise in oil yesterday. While the market enjoyed a rebound of relief yesterday, inflation data and the Fed’s success (or failure) in fighting it will remain the focus of near-term concern.

Data download

International economy

Last night saw the release of China’s April services PMI at 36.2, deepening the trough created by the relentless pursuit of the “Zero Covid” policy. So far, the only time in recent memory that the services PMI has been lower was when it hit 26.51 in February 2020. That turned out to be a month-long decline that saw a rebound to 43 in March. Given the current positioning on Zero Covid, our view is that the Services PMI will continue to be severely impacted for some time.

German factory orders (-4.7%) and sales (-5.9%) for March both extended their contraction, with orders surprisingly down 4.2% against a slightly optimistic forecast -0.50%.

The UK services PMI last April came in at 58.9, below estimates of 62.6 but slightly higher than the previous print of 58.3. The Bank of England announced this morning a rate hike of 25 basis points (0.25%), bringing the British bank rate to 1.00%. This is the third increase of 25 points in as many meetings. The Bank is expected to continue raising rates to contain inflation, which is at 7.0% versus the 2.0% target.

Domestical economy

8:30 a.m. ET will see the release of initial weekly jobless claims with initial claims expected to remain flat at 180,000. We will also have the first quarter update for unit labor costs and productivity, labor costs expected to show significant growth of 8.0% from previous growth of 0.90% and productivity down 1.8% from 6.6% growth in the quarter previous.


Comments from Fed Chairman Powell that, at least for now, interest rate hikes of 75 basis points are not on the cards sparked a rally in stocks, with the S&P 500 rising 3.0 % and the Nasdaq Composite climbing 3.2%. The Dow Jones Industrial Average and the Russell 2000 lagged slightly, rising 2.8% and 2.7% respectively. All 11 sectors of the S&P 500 closed higher. Including yesterday’s moves, here’s how the major market indicators stack up year-to-date:

  • Dow Jones Industrial Average: -6.3%
  • S&P 500: -9.8%
  • Nasdaq compound: -17.1%
  • Russell 2000: -13.2%
  • Bitcoin (USD-BTC): -17.3%
  • Ether (ETH-USD): -22.2%

Stocks to Watch

Before trading begins, ACI Worldwide (ACIW), ADT (ADT), Anheuser-Busch InBev (BUD), Cars.com (CARS), Crocs (CROX), Datadog (DDOG), DraftKings (DKNG), Hain Celestial (HAIN), Interdigital (IDCC ), Kellogg (K), Nikola Corp. (NKLA), Papa John’s (PZZA), Shopify (SHOP), SolarWinds (SWI), and Trimble (TRMB) are supposed to publish their quarterly results.

Shares of eBay (EBAY) came under some pressure in the secondary market last night after better-than-expected March quarter results, but investors focused more on bearish forecasts for the current quarter and for 2022 as a whole. March quarter, eBay’s revenue fell 17.2% year-over-year to $2.48. billion, slightly better than the consensus of $2.46 billion. For the current quarter, eBay has guided revenue to $2.35-2.40 billion from consensus of $2.54 billion, and for 2022 it now forecasts revenue of 9.6-9, $9 billion versus consensus forecast of $10.39 billion.

It was the same with Etsy (ETSY) and his actions. The company announced results above and below expectations for the March quarter, this good news was overshadowed by the lower revenue forecast for the current quarter. The company forecasts revenue for the June quarter of $540 million to $590 million versus consensus of $627.3 million. On the earnings call, the company said that “assuming macro trends do not worsen,” it expects the rate of gross merchandise sales (GMS) growth to ease. improves for the second half of 2022, with revenues exceeding supermarkets.

Shares of Reservation credits (BKNG) rose last night after better-than-expected March quarter results, boosted by the 136.8% year-on-year increase in revenue. Gross bookings for the quarter jumped 128.7% year-on-year to $27.3 billion, while room nights booked in the quarter were up 100% year-on-year. Plane tickets booked in the first quarter increased by 152% compared to 2019 and by 69% compared to 2022.

These positive travel comments were echoed by from TripAdvisor (TRIP) comments made last night as part of its March quarter earnings report – “After a January impacted by Omicron, our business picked up strongly in February and March, which exceeded our own expectations for the quarter. We are optimistic about the rest of 2022 and growing travel demand.


Investors looking to gauge the health of the IPO market will want to watch Bausch + Lomb’s (BLCO) offering this week, which is expected to be priced between $21 and $24 per share. Readers who want to dig deeper into the schedule of upcoming IPOs should visit Nasdaq’s Latest and Upcoming IPOs page.

After today’s market close

Air Lease (AL), Alarm.com (ALRM), Allscripts (MDRX), AMN Healthcare (AMN), Axon (AXON), Block (SQ), Cloudflare (NET), Corsair Gaming (CRSR), DoorDash (DASH), Dropbox (DBX), fuboTV (FUBO), Insulet (PODD), Live Nation (LYV), Monster Beverage (MNST), Nio (NIO), NortonLifeLock (NLOK), SailPoint (SAIL), Shake Shack (SHAK), Tivity Health (TVTY), Virgin Galactic (SPCE) and Zillow (ZG) should publish their latest quarterly results. Investors should be on the lookout for companies that announce their March quarter results in advance. Those interested in learning more about which companies release their reports when head to the Nasdaq earnings calendar.

on the horizon

Friday, May 6

  • Japan: CPI Tokyo – April
  • United States: jobs report – April
  • United States: Consumer credit – March

Thought of the day

“Loss is nothing but change, and change is nature’s delight.” ~Marc Aurelius


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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