Markets continued to strike back nicely from our month-to-date doldrums this Hump Day, with each of the market indices gaining roughly 1.5% or more on a second-straight up-day. The Dow closed near session highs, +526 points or +1.60%, the S&P 500 was +1.49% on the day, and the Nasdaq grew +162 points, +1.54%. The small-cap Russell 2000 beat the field for the second-straight session, +1.66%.
Nike’s
NKE
strong quarterly earnings yesterday afternoon carried over to this morning’s positive market attitude, along with a slimmer
Current Account Deficit
for Q3. Once the opening bell rang, we got stronger-than-expected
Consumer Confidence
numbers for the present month: 108.3 versus 101.2 expected and 101.4 reported a month ago. Existing Home Sales, as predicted, came in lighter for November, albeit a much bigger jump: 4.09 million seasonally adjusted, annualized units versus 4.43 million reported for October.
Really, though, it’s that the inflation/recession discussion is coming into clearer view these days. We already know the market hates uncertainty worst of all; while we’re still not iron clad on what will happen next year and when, we now can see the outline of the end of rate hikes in the first half of next year. If economic indicators turn sharply south in the near-term, it increases the chances of our economy sliding into a recession — but then we can expect the turnaround sooner than later, as well.
So whether we recognize this bullishness as a verifiable “Santa Claus Rally” or not, one thing that does look familiar here is market participants are tacking toward following something of a best-case scenario looking forward: a 5+% Fed funds rate is a short-lived thing due to a light, short recession occurring in the first quarter of ’23. There are too many moving pieces to assert any of this with real confidence; the jury’s out on how far or how long our slide will be.
As we’ve seen half a dozen times this year already, investors’ willingness to look out beyond toward greener pastures wind up getting snagged on the thorns and brush they weren’t paying attention to. Thus, the bullishness in the market winds up panning out as nothing more than another head-fake, with lower highs and lower lows over time. Even a “Santa Claus Rally” through next week might fit that mode we’ve existed within throughout 2022.
Micron
MU
missed estimates on its bottom line for the first time since fiscal Q2 2019 this afternoon, reporting -$0.04 cents per share — doubling the expected loss of -$0.02. Revenues came in a tad better than the Zacks consensus at $4.09 billion, though still down -45% from a year ago. Next quarter earnings guidance dropped to -$0.62 per share from the anticipated -$0.30. Yet shares were up briefly on the release before slipping down -1.5% at this hour.
One reason for this is the proactive stance Micron has taken in its guide: a 10% headcount cut and $30 million in charges among them. While not great news, investors seemed to appreciate the forward nature of the company taking the inevitable headwinds straight on — the sooner to come out the other end intact. Micron still holds a strong position in data storage, and that does not look to change anytime soon.
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