Apr 27, 2016, (Update: 2:20pm EDT)
As expected, the Fed has kept its interest rates unchanged. Euro, Gold and the Dollar index are doing their crazy dance of going up, falling down, going up again, as speculators try to make sense of the central bank’s statement.
In major U.S. indexes, Nasdaq is still sulking in negative, S&P 500 turned positive and Dow Jones added some gains. But, the Fed’s statement has talked about improvement in labor market conditions in the U.S., and has dropped “negative” word to describe the global economy it has been using in some previous policy statements. On the other hand, the central bank once again expressed its worries about stagnant inflation.
Overall, the Fed has neither given any clear hint about good or bad conditions for its rate hike plans. Bulls can see positive signals, bears can see negative hints in its statement and confuse each other with trading in opposite directions. The Fed will continue to twiddle its thumbs.
It has also given new lease of life to markets’ volatility.
(earlier :9:36AM EDT)
U.S. markets are poised for a volatile session today, driven by too many important events.
The opening bell will reverberate with yesterday’s big tech results from Apple and Twitter, both failing analysts’ expectations.
Twitter is trading down by nearly -15% in pre-open session and Apple has lost more than -7%. After jolts from Microsoft and Alphabet (Google’s parent company), Apple and Twitter have delivered double negative dose for tech index Nasdaq.
It was literally jaw-dropping going through Apple’s numbers and forward guidance. Sales of its all iconic brands-iPad, Mac, iPhone- tumbled together. The company reported $50.6 billion in revenue (analysts expected $52 billion) and per share earnings of $1.90 (consensus estimates were $1.99).
Last year, these numbers were at $58.0 billion and $2.33, respectively.
iPhone sales fell 16% year-over-year, iPhone revenue dropped 18% , iPad sales fell 19% Mac sales tumbled 12% . Apple product sales in the Americas, its largest market, dropped 10% while in greater China, Apple saw a nosedive of 26% in its product sales.
As if all these numbers were not bad enough, Apple’s guidance for Q3 at $41 billion- $43 billion was much worse than expected estimates of $47 billion.
U.S. markets are also scheduled for a number of important economic reports, including the Crude Oil inventory numbers, through the early session today. As usual, these reports can cause considerable volatility in markets as speculators will make quick bets on results.
The Fed’s policy announcement:
The biggest event today will be the Fed’s short term policy announcement at 2 PM EDT. Although no one is expecting a rate hike in this meeting, markets will react quickly to any changed word/ hint in the policy statement about the central bank’s forthcoming rate hikes. This reaction can be in either direction.
That is the extremely action-packed agenda for U.S. markets today. Trade at your own risk in such volatile conditions.
Good luck, enjoy the session!