The Buzz on Business for May 23rd 2024

The release on Wednesday of the minutes from the Federal Reserve Board meeting held earlier this month took a decidedly hawkish turn. Interesting to us was that some board members seemed willing to hike rates in the face of persistent inflation. This is interesting because Fed Chairman Jerome Powell, in his press conference immediately after the conclusion of the meeting, specifically and emphatically, to our ears, took rate hikes off the table.

Regular listeners may recall that the Fed voted, at that meeting, to slightly ease its mildly restrictive policy by reducing sales of the bonds it holds on its balance sheet.

Recall also that in speeches this week, board members seemed to explicitly contradict each other regarding the possibility and timing of rate cuts.

These mixed messages aren’t, in our view, particularly helpful. Inflation is too high and seems to be headed higher, which would be devastating and would quickly lead to even higher interest rates. In an era of multi-trillion-dollar annual government deficits, the Central Bank just doesn’t have many tools available to fight it.

A consistent message and a demonstrated seriousness regarding the effort is a simple, straightforward, and useful tool the Fed appears determined to squander.

Stock Market Report

Markets opened, little changed from Tuesday’s close on Wednesday morning and looked to be sitting this one out in anticipation of NVIDIA’s earnings after the bell. But the release of the Minutes of the  Fed’s Meeting brought in the sellers and stocks fell throughout the afternoon.

• The Dow Jones Industrial Average was off one-half of 1%. That's 202 points, and it closed at 39,671.
• The S&P 500 was off 0.25%. That's 14 points on the S&P, and it starts the day today at 5,307.
• The NASDAQ Composite was off 31 points, that's two-tenths of 1%, and it closed at 16,802.
• The small caps had a tougher go of things. The Russell 2000 was off eight-tenths of 1%. That's 17 points, and they closed at 2,082.

Bond Market Report

Interest rates were mixed, mostly higher on Wednesday.

• The yield on the 2-year treasury was up four basis points and it closed at 4.873%.
• The yield on the 20-year was off slightly, basically flat, and it starts the session today at 4.653%.

Oil, Gold, and Bitcoin

• Oil fell for the third straight day. It was off $0.87 and a barrel, now changes hands at $77.29.
• Gold had a tough day. It was off $45.20, and a troy ounce will now set you back $2,382.30.
• Bitcoin poked its head above 70,000 early in the day but fell back a bit for a small gain. It was up $1,084.24 and at 4:00 PM Eastern Time stood at $69,536.26.

Blow-out Quarter/Year from NVIDIA

NVIDIA announced earnings after the close, and at first blush the numbers look pretty good indeed. The company exceeded expectations for both the top and bottom lines, and by a comfortable margin. And it raised guidance for the second quarter and for the balance of the year.

In the last 12 months, earnings at NVIDIA have grown from $1.09. per share to over $6. In twelve months! In the same period quarterly revenue grew from. $7.19 billion to over $26 billion. A remarkable, stunning achievement.

The stock traded up about 4% in the overnight session after the announcement. We will be watching to see how it does throughout the day today.

Housing Market Weakens

Existing home sales for April came in lower than expected. Yesterday we've said on this podcast that the housing market has maintained some strength in the face of interest rates that have been higher for longer. It seems that that strength may be showing some signs of weakness in the last couple of months.

Today we get some more out of the housing market and since it is Thursday, we also get initial and continuing jobless claims. As well as some data from the manufacturing sector.

We will be watching, listening, analyzing and will report all of it and more for you tomorrow here on the Buzz.