The Fed is not likely to announce they’re letting up on the brakes at this point. They are still seeing inflation numbers that have not started to recede.
*Cleavland Fed President Loretta Mester echoed this, saying that she wants to see “very compelling evidence” that month-to-month price increases are moderating before declaring that central bank has been successful in curbing inflation.*
Neil Dutta, head of economics at Renaissance Macro Research, said in an emailed note that the hawkish tone from the two Fed speakers was consistent with remarks made by Minneapolis Fed President Neel Kashkari and other Fed officials in recent days. While that helps explain the jump in short-term interest rates, which are the most sensitive to expectations surrounding the path of Fed rate hikes, it might not be great for stocks.
“This does not strike us as the Fed being close to pivoting,” he wrote. “The squawking is having the intended result with two year yields up 18bps now. Perhaps the Fed rhetoric caps the upside to equity multiples.”
*An update on the state of the U.S. labor market showed job openings fell to 10.7 million in June from 11.3 million a month earlier. Openings have dropped three months in a row after peaking in the early spring at a record 11.9 million. The number of people who quit jobs in June, meanwhile, only fell slightly to 4.23 million, the Labor Department said Tuesday.*
*Fresh economic data kept investors on their toes. Recent data showed that US job openings in June fell to a nine-month low, a sign of moderating demand for labor as economic pressures mount. The job market has been a bright spot in an economy otherwise losing momentum and possibly heading toward a recession.*
*The highlight of this week’s economic data calendar arrives on Friday, when investors will receive an update on the state of the labor market for July. Essaye said that investors appear to be holding out hope that the upcoming economic data will confirm that both the labor market’s tightness, as well as high inflation, will start to moderate.*
*Goldman Sachs Group Inc. strategists led by Cecilia Mariotti said it was too soon for stock markets to fade the risks of a recession on expectations of a pivot in the Fed’s hawkish policy. JPMorgan Chase & Co. strategists, on the other hand, said the outlook for US stocks is improving for the second half of the year on attractive valuations.*
*Single-stock movers*
• Shares of *Uber Technologies Inc.* finished 18.9% higher Tuesday after the ride-hailing and delivery services company swung to a second-quarter loss but reported a more than doubling in revenue that beat expectations by a wide margin and became cash-flow positive for the first time.
• *Caterpillar Inc.* shares fell 5.8% after the construction and mining equipment maker reported second-quarter profit that beat expectations but sales that came up short, as higher pricing and sales volume were partially offset by unfavorable currency impacts also warning of a bigger drop in demand for its excavators in property crisis-hit China, piling more pain on the industrial bellwether grappling with supply-chain disruptions.
• The most traded stock in the S&P 500 was *Tesla Inc* , with $28.7 billion worth of shares exchanged during the session. Its shares rose 1.1% after Citigroup hiked its price target on the electric car maker. Still, the investment firm maintained a sell rating on the electric vehicle maker.
• *TD Bank Group* said Tuesday it would buy investment bank *Cowen Inc.* for $1.3 billion, or $39 a share, a premium of about 10% over its closing price of $35.49 a share on Monday and a purchase price multiple of 8.1 times Cowen’s estimated 2023 earnings. Cowen shares rose 8.4%, while TD shares declined 0.3%.
• *Pinterest Inc.* late Monday missed expectations for earnings and guided for revenue lower than analysts expected in the current quarter, but shares were rallying as users stuck around and activist investor Elliott Management Corp. confirmed a previously reported investment in the company. Pinterest shares rose 11.6%.
By: via @AlliesFin Serve Stock Market
