Markets Mixed on Earnings and Fed Chair Announcement; Bonds up Marginally
Good morning, and good riddance to January and its associated weather.
The Dow (-0.4%), NASDAQ, (-0.2%), and S&P 500 (+0.3%) were mixed for the week. Meanwhile, taxable bonds and tax-free municipal bonds were each up about 0.1%. The 10-year Treasury yield gained 0.03% to finish the week at 4.26%.
Last week’s news was highlighted by four major technology company earnings announcements (Apple, Microsoft, Meta, and Tesla), the Fed holding rates steady, and President Trump’s nomination for the new Fed Chairman, who will take over in May. Microsoft disappointed investors with their results, and the stock fell 10% in one day. Conversely, Meta reported excellent earnings and gained almost 10% on the same day. Apple and Tesla also reported earnings that were better than expectations, but only Apple’s share price went up, while Tesla was down for the week.
The Fed met on Wednesday, and announced they would keep interest rates the same, which came as no surprise to investors. However, the most logical choice for the new Fed Chairman was announced, and that selection was Kevin Warsh. Mr. Warsh is a former Fed governor who is well respected on the Street and has been a strong advocate for the independence of the Fed, while also being critical of the Fed’s bloated balance sheet and his view that the Committee is now acting in a way that lacks accountability. That was not taken well by commodities, as gold, silver, and copper each fell sharply after the announcement, erasing 10% - 20% of its recent gains.
From a political perspective, the Senate agreed to a budget deal, but they must wait for the house to return to vote on it. Lastly, the all-important decision by the Supreme Court still lurks out there, and could cause a significant swing in the market once announced. It can be expected that if the Supreme Court rules that the tariffs are unconstitutional and need to be paid back, it will likely be met with a sharp downturn in the markets. I have no opinion regarding the decision, but I certainly don’t want to see the markets get walloped.
Have a great day and terrific week!
Source: Yahoo Finance
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