Stocks wobbled their way to a second consecutive session of gains Tuesday as investors looked ahead to tomorrow’s pivotal Federal Reserve announcement.
Not that Tuesday was entirely without its own developments.
U.S. job openings unexpectedly increased in March, by 205,000 to a record 11.55 million, though 4.5 million U.S. workers quit the labor force to widen the labor gap to 5.6 million workers – also a new high.
“This increased tightness suggests that strong wage growth will persist until improvements in labor supply and normalization of job openings bring the labor market back into balance,” says a Goldman Sachs economic research team. Also, March factory orders improved by a better-than-expected 2.2%.
The first-quarter earnings calendar kept on churning, too.
Pfizer (PFE, +2.0%) lowered its full-year earnings forecasts, but Wall Street nonetheless reacted positively to a solid Q1 report. Strong sales of both its COVID-19 vaccine and oral antiviral helped the Big Pharma outfit to solid top- and bottom-line beats.
Clorox (CLX, +3.0%) also beat Street estimates, though the company also announced it would continue raising prices after profit margins took a sharp hit in its most recent three-month period. It also lowered its full-year earnings forecast for the second consecutive quarter.
All that was enough to help the broader markets to another small up day. The S&P 500 (+0.5% to 4,175) led the way, with the Dow (+0.2% to 33,128) and Nasdaq (+0.2% to 12,563) also producing modest gains.
It’s also a peculiar lead-up into tomorrow’s Federal Open Market Committee policy announcement, where Kiplinger (and just about everyone else) expects the Fed to declare a 50-basis-point increase to its benchmark interest rate. Much of the market’s recent issues have been tied to rate jitters, though it could be that the market has finally priced in the central bank’s expected moves.
“We may very well have seen ‘peak hawkishness,’ meaning that the market’s expectations for Fed policy could stabilize or moderate somewhat,” says Lauren Goodwin, economist and portfolio strategist at New York Life Investments. Though she adds “it’s too early to be sure that ‘peak hawkishness’ has passed.”
Other news in the stock market today:
The small-cap Russell 2000 jumped 0.9% to 1,898.
U.S. crude oil futures fell 2.6% to settle at $102.41 per barrel.
Gold futures gained 0.4% to end at $1,870.60 an ounce.
Bitcoin didn’t partake in Tuesday’s recovery, dropping 2.2% to $37,701.91. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
Carvana (CVNA) slid 5.2% after Wells Fargo analyst Zachary Fadem downgraded the used car retailer to Equalweight from Overweight, the equivalents of Hold and Buy, respectively. “Recent evidence suggests that macro headwinds are building, access to capital is dwindling, and appetite for high-growth, free cash flow-negative companies is becoming increasingly scarce,” Fadem says. The analyst also downgraded Vroom (VRM, -4.3%) and Shift Technologies (SFT, -5.0%).
Nutrien (NTR) climbed 6.5% after the fertilizer firm reported higher-than-expected adjusted first-quarter earnings of $2.70 per share. The company also said it raised its full-year forecast as prices for key crops like corn, soybean and wheat are up 50% to 90% above their 10-year average. “We think NTR’s retail segment will continue to experience strong top-line growth across most of its products, given solid demand and price increases,” says CFRA Research analyst Richard Wolfe (Hold). “NTR’s Q1 results and guidance capture the benefits of being a crop input provider amid strong agriculture fundamentals and investors may view this as a safe haven in the inflationary environment.” Other materials stocks like Mosaic (MOS, +8.7%) and CF Industries (CF, +4.4%) posted solid gains today, too.
Let’s Go, IPOs! Let’s Go!
A return to market stability, even if for a short while, would be welcome news to two Wall Street groups: investment bankers, and retail investors needing to scratch an itch for “something new.”
A downturn in equities and high volatility have put the pinch on initial public offerings (IPOs), in which privately held companies list on the public markets. According to IPO-focused registered investment adviser Renaissance Capital, just 26 U.S. initial public offerings have priced so far in 2022 – down a little more than 80% from the same date last year.
But it’s possible this week could help kick-start some IPO activity. In just a couple of days, consumer eye care name Bausch + Lomb will hit the public markets in a spinoff from Bausch Health Companies (BHC). A warm reception to this offering – and no nasty surprises from the Fed – could help coax a few more anticipated offerings on the market, such as Steinway, which recently announced its plans to list on the New York Stock Exchange.
Investors curious about which new stocks could be hitting the markets this year need look no farther than our list of highly anticipated potential offerings.