Lower for longer
While the term “transitory” has fallen out of favor with the Fed, the word “recalibrate” is now in vogue. Chair Jerome Powell used the expression a total of 10x during his post-meeting press conference on Wednesday, and the markets are just loving it. Some time was needed to digest the new phrase, but it seems that it’ll be one to add to the central bank lexicon going forward.
Translation: The Fed’s past policy stance is being recalibrated to “lower for longer” to support the labor market and economic growth. As long as inflation doesn’t resurface, the easing cycle should continue through 2026 and beyond. The accommodative stance is unleashing some animal spirits, with bullish forces igniting hopes of a soft landing, healthy corporate profits and resurgent growth.
Risk assets responded in kind on Thursday, and then some. The Dow Jones Industrial Average hit 42,000 for the first time in its history, the S&P 500 scored its 39th record close of the year, and the YTD gains for the Nasdaq Composite also returned to 20%, fueled by a rally in tech. Economic data on the labor market further boosted sentiment, with the number of Americans filing for initial jobless claims falling to its lowest level since May.
SA commentary: “In my view, this is great for markets,” said Victor Dergunov, Investing Group Leader of The Financial Prophet. “It states that the Fed is serious about supporting the market. In a sense, the Fed put is back, which is excellent for high-quality stocks and other risk assets advancing from here. However, we must avoid a significant reversal. Also, it’s crucial that the market focuses on the positives and doesn’t panic because the Fed brought the bazooka out.” (37 comments)
New sneakers
Nike (NKE) turned some heads by announcing that its CEO John Donahoe will step down and be replaced by retired insider Elliott Hill. Hill spent his career at Nike in various senior leadership positions across Europe and North America, and then retired following his role as president of Consumer & Marketplace in 2020. The news sent Nike shares soaring 7.6% AH on Thursday, with investors appearing confident in Hill’s leadership as the footwear giant faces profit volatility, guidance shortcomings, competition headwinds, and a lack of strategic long-term clarity. (9 comments)
Compromised comms
Disney (DIS) will stop using corporate messaging platform Slack (CRM) following a cyberattack in which more than a terabyte of the company’s data was leaked online. The data from thousands of Disney’s Slack channels contained discussions about ad campaigns and studio technology, which were exposed by hacker group Nullbulge. Many teams have already started to transition to “streamlined enterprise-wide collaboration tools,” according to an internal memo, with most of Disney’s businesses expected to stop using the service later this year. (9 comments)
We understand?
In its latest quarterly results, FedEx (FDX) missed Q1 expectations and dropped its outlook for FY25, dragging shares 11% lower AH on Thursday. The package delivery behemoth blamed reduced demand for priority services, constrained yield growth, as well as higher operating expenses. The dimmed outlook will likely end a nine-day winning streak when the stock opens for regular trading today and reflects a very competitive pricing environment and challenging industrial economy. Rival UPS (UPS) shares also fell 2.4% AH following the results. (10 comments)
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