Notes on FOMC Decision and Earnings After the Close

Major stock market indexes finished in the green today, bolstered somewhat by the expected “no move” decided by the Fed at its latest Federal Open Market Committee (FOMC) meeting, which concluded today. Volatility picked up on the news headline and subsequent press conference with Fed Chair Kevin Warsh. The Dow was up +71 points, the Nasdaq +72 and the S&P 500 +21 points. The small-cap Russell 2000 Index gained 6 points on the regular trading session.
 

Two Dissents as Fed Keeps Rates Unchanged 

The FOMC today delivered the expected headline: “No Change to Fed Funds Rate.” In a 10-2 vote, the Fed decided to keep interest rates at their +3.75-4.00% range. Only Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented — they voted for a quarter-point raise to +4.00-4.25%. “Resilient,” “strong” and “robust” words used to describe the U.S. economy — and in fewer than 200 words altogether.

The statement also cited inflation as being “elevated,” although the “accumulation of information will help the Committee determine its policy stance… to the +2% (inflation) goal…” That’s about as close to “guidance” investors have gotten from the Fed this time around. In his presser following the statement release, Warsh did say that, while the FOMC will again hold eight meetings next year, only six of these would decide on monetary policy.
 

Earnings Reports at a Glance: MSFT, GOOGL & More

Microsoft MSFT posted strong fiscal Q1 numbers this afternoon — a day after the company said 60K in the tech giant’s workforce are eligible for severance packages. This suggests a new round of job cuts, much like Meta META, Amazon AMZN and others had reported recently. (Spared will be those jobs in Data Center, Cybersecurity, etc.) 

Earnings of $4.89 per share rose +19% year over year — higher than the $4.70 per share expected and $4.13 reported in the year-ago quarter. Revenues came in at $92.3 billion, above the $90.58 billion anticipated at +21% year over year. Shares are up +4% in late trading.

Google parent Alphabet GOOGL missed estimates on both top and bottom lines in its Q3 report after Wednesday’s close, with earnings of $2.12 per share on revenues of $111.2 billion (ex-TAC; $127.6 billion with TAC not taken out). Cloud gained +103% year over year to $30.7 billion in the quarter. Services were led by Search, up another +12%, with query growth its highest in five years. This is only the second earnings miss for GOOGL in five years, and shares fell -7.5% immediately after.

Speaking of earnings misses, ServiceNow NOW posted its first-ever earnings miss since Zacks began tracking the company in 2014: $1.00 per share versus expectations of $1.02. Revenues, on the other hand, outpaced estimates — $4.107 billion in the quarter, up from an expected $4.09 billion. Even with a new OpenAI deal announced today, ServiceNow shares plummeted -16% on the earnings news.

Ford Motor Co. F rolled over expectations on both top and bottom lines this afternoon, with earnings beating the Zacks consensus by a solid dime to $0.49 per share on $49.5 billion in quarterly sales. In truth, these were pretty low bars to get over — both earnings and sales were expected to trail last year’s quarter. A harsh $4 billion loss on Ford’s Model e, however, dampened the proceedings, and shares are down -1.9% in late trading. 

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