Raphael Stevens

Meta headquarters in Menlo Park, California, US, on Thursday, July 21, 2022.
David Paul Morris | Bloomberg | Getty Images

Check out the companies making headlines after the bell: 
Meta Platforms – Shares of Meta Platforms jumped nearly 6% on stronger-than-expected quarterly results. The social media company issued optimistic sales guidance for the third quarter and showed an 11% uptick in revenue.

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Chipotle Mexican Grill — The burrito chain’s stock tumbled 9% in extended trading after sales fell short of Wall Street expectations. Chipotle reported adjusted earnings of $12.65 a share on $2.51 billion in revenue. Analysts polled by Refinitiv had expected EPS of $12.31 and revenues of $2.53 billion.
Imax — Imax shares added 5% after reporting better-than-expected quarterly results. The entertainment technology company reported adjusted earnings of 26 cents a share. That topped the 16 cents expected by analysts, per Refinitiv. Revenue came in at $98 million, above the $86.6 billion expected.
Lam Research – Shares of the semiconductor firm got a more than 2% boost after the company reported a strong quarter. Lam posted adjusted earnings of $5.98 per share, beating estimates by 91 cents per share, per Refinitiv. Revenue of $3.21 billion beat expectations of $3.13 billion. Financial guidance topped estimates as well.
ServiceNow — ServiceNow dropped 3% despite reporting a beat on the top and bottom lines. The cloud computing company posted second-quarter adjusted earnings of $2.37 per share on revenue of $2.15 billion. Analysts had expected per-share earnings of $2.05 on revenue of $2.13 billion. The company also unveiled new generative artificial intelligence tools.
eBay – The e-commerce stock slid about 5% after eBay issued weak guidance for the current quarter. The company said it anticipates third-quarter adjusted earnings per share of 96 cents to $1.01 per share, while analysts polled by FactSet anticipated $1.02 in earnings. The company posted $1.03 in adjusted earnings per share on revenue of $2.54 billion. Analysts called for earnings of 99 cents per share on revenue of $2.51 billion, according to Refinitiv.

Sunnova Energy – Shares of the solar company slid more than 7% after hours following weaker-than-expected financial results for the second quarter. Sunnova posted a wider-than-expected loss of 74 cents per share, while analysts expected a loss of 42 cents per share, according to FactSet. Revenue came in at $166.4 million compared to expectations of $195.5 million.
Align Technology – The orthodontics company saw its shares pop 12% after it posted adjusted earnings of $2.22 per share for the second quarter, beating estimates of $2.03 per share, according to Refinitiv. Revenue for the quarter also topped estimates, and revenue guidance for the year was above analyst expectations.
Mattel – Shares of the toymaker were flat. Mattel announced the departure of Richard Dickson, chief operating officer, who is leaving to become CEO of Gap. The company also posted second-quarter adjusted earnings of 10 cents a share on revenue of $1.09 billion. Analysts called for a per-share loss of 2 cents and revenue of $1 billion, according to Refinitiv.
Seagate Technology — Shares fell 2% in extended trading. The data storage company posted revenue for the fourth fiscal quarter that came in at $1.60 billion, while analysts called for revenue of $1.68 billion, per FactSet.
L3Harris Technologies — The aerospace and defense stock fell more than 2% even after earnings came in above expectations. L3Harris reported adjusted earnings of $2.97 a share on $4.69 billion in revenue, and lifted earnings and revenue guidance. Analysts anticipated $2.94 in EPS on revenue of $4.37 billion for the latest quarter, according to Refinitiv. Aerojet Rocketdyne shares added more than 1% on news the Federal Trade Commission will not block its acquisition by L3Harris.
— CNBC’s Tanaya Macheel, Sarah Min and Darla Mercado contributed reporting More

It was never in doubt. In the run-up to the Federal Reserve’s meeting this week, investors assigned a probability of nearly 99% to a decision by the central bank to raise interest rates once again. On July 26th policymakers duly fulfilled those expectations, with their 11th increase in 12 meetings, together making for America’s sharpest course of monetary tightening in four decades. The central bank’s next steps, however, are clouded by uncertainty.Some economists are convinced that this will be the Fed’s last rate rise in this cycle. Inflation has come down from its highs in 2022, with consumer prices rising just 3% year-on-year in June. Core inflation—which strips out volatile food and energy costs—has been a little more stubborn, but even it has started to soften, in a sign that underlying price pressures are easing. This opens a pathway for the Fed to relent, hopefully guiding America to a much-discussed soft landing. Ellen Zentner of Morgan Stanley, a bank, expects an “extended hold” for the Fed, presaging a rate cut at the start of next year. Others are not so sure. Inflation has consistently wrong-footed optimists over the past couple of years. Were, for instance, energy prices to rally, consumers and businesses could quickly revise up their expectations for inflation, nudging the Fed towards another rate increase. If an incipient rebound in housing prices gathers pace, that would also fuel concerns. Vigour in the labour market adds to the worries, because fast-rising wages feed into inflation. Remarkably, the Fed’s aggressive actions have barely affected American workers thus far: the unemployment rate today is 3.6%, identical to its level in March 2022 when the Fed raised rates for the first time in this cycle (see chart). The pace of tightening would normally be expected to drive up unemployment. Instead, the recovery from the covid-19 pandemic, including an increase in the number of willing workers, seems to have cushioned the economy.Opposing views among economists are mirrored within the Fed itself. For the past two years America’s central bankers have spoken in similar terms about the peril of inflation, and have been nearly unanimous when it comes to big rate moves. In recent months, however, divisions have surfaced. Christopher Waller, a Fed governor, has come to represent the more hawkish voices. This month he warned that the central bank could continue raising rates until there is sustained improvement in inflation, dismissing the over-optimism bred by the weaker-than-expected price figures for June. “One data point does not make a trend,” he warned. At the other end of the spectrum is Raphael Bostic, president of the Fed’s Atlanta branch, who said even prior to the latest rate increase that the central bank could stop hiking. “Gradual disinflation will continue,” he assured listeners in late June.Even if the latest rate increase does end up marking the peak for the Fed, Jerome Powell, its chairman, has maintained a hawkish tilt in his pronouncements. “What our eyes are telling us is that policy has not been restrictive enough for long enough,” he told a press conference following the rate hike. Financial conditions have loosened in recent months. The s&p 500, an index of America’s biggest stocks, is up nearly one-fifth from its lows in March, when a handful of regional banks collapsed. With his sterner tone, Mr Powell may want to restrain investors from getting ahead of themselves, which could add to inflationary momentum.Central bankers wanting to preserve their reputations as inflation-fighters may prefer to err towards toughness. Steven Englander of Standard Chartered, a bank, likens the Fed to a weather forecaster who thinks there is a 30% chance of rain. It still makes sense to highlight the potential for wet weather, because predicting sun but getting rain is perceived as worse than predicting rain and ending up with sun.In practice, the Fed is sure to be flexible, reacting to economic data. It can look north of the American border for an example of the impossibility of maintaining a fixed policy stance. The Bank of Canada had stopped its rate-rise cycle in January, thinking that inflation had crested. But in June it was forced to resume tightening because economic growth had remained too hot, and inflation too sticky, for comfort.Ultimately, though, there are no risk-free choices for the Fed. What is seen as the more doveish option—holding rates steady for the rest of this year—will in fact take on an increasingly hawkish hue if inflation does continue to recede. Unchanged nominal rates would be ever more restrictive in real terms (assuming that inflationary expectations diminish alongside waning price pressures). In such a scenario central bankers wishing to maintain their current policy stance should therefore think about cutting rates (see chart). When inflation was sky-high, the Fed’s task was tough yet its decisions quite straightforward: officials did not really have much choice but to raise rates. From here on, its task looks easier but its decisions more fraught. ■ More

The Federal Reserve approved a much-anticipated interest rate hike that takes benchmark borrowing costs to their highest level in more than 22 years.
The quarter percentage point increase will bring the fed funds rate to a target range of 5.25%-5.5%.
While policymakers indicated at the June meeting that two rate hikes are coming this year, markets are pricing in a better-than-even chance that there won’t be any more moves this year.
Chair Jerome Powell said the central bank will make data-driven decisions on a “meeting-by-meeting” basis.

WASHINGTON – The Federal Reserve on Wednesday approved a much-anticipated interest rate hike that takes benchmark borrowing costs to their highest level in more than 22 years.
In a move that financial markets had completely priced in, the central bank’s Federal Open Market Committee raised its funds rate by a quarter percentage point to a target range of 5.25%-5.5%. The midpoint of that target range would be the highest level for the benchmark rate since early 2001.

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Markets were watching for signs that the hike could be the last before Fed officials take a break to watch how the previous increases are impacting economic conditions. While policymakers indicated at the June meeting that two rate rises are coming this year, markets have been pricing in a better-than-even chance that there won’t be any more moves this year.
During a news conference, Chairman Jerome Powell said inflation has moderated somewhat since the middle of last year, but hitting the Fed’s 2% target “has a long way to go.” Still, he seemed to leave room to potentially hold rates steady at the Fed’s next meeting in September.
“I would say it’s certainly possible that we will raise funds again at the September meeting if the data warranted,” said Powell. “And I would also say it’s possible that we would choose to hold steady and we’re going to be making careful assessments, as I said, meeting by meeting.”
Powell said the FOMC will be assessing “the totality of the incoming data” as well as the implications for economic activity and inflation.
Markets initially bounced following the meeting but ended mixed. The Dow Jones Industrial Average continued its streak of higher closings, rising by 82 points, but the S&P 500 and Nasdaq Composite were little changed. Treasury yields moved lower.

“It is time for the Fed to give the economy time to absorb the impact of past rate hikes,” said Joe Brusuelas, U.S. chief economist at RSM. “With the Fed’s latest rate increase of 25 basis points now in the books, we think that improvement in the underlying pace of inflation, cooler job creation and modest growth are creating the conditions where the Fed can effectively end its rate hike campaign.”
The post-meeting statement, though, offered only a vague reference to what will guide the FOMC’s future moves.
“The Committee will continue to assess additional information and its implications for monetary policy,” the statement said in a line that was tweaked from the previous months’ communication. That echoes a data-dependent approach – as opposed to a set schedule – that virtually all central bank officials have embraced in recent public statements.
 The hike received unanimous approval from voting committee members.
 The only other change of note in the statement was an upgrade of economic growth to “moderate” from “modest” at the June meeting despite expectations for at least a mild recession ahead. The statement again described inflation as “elevated” and job gains as “robust.”
The increase is the 11th time the FOMC has raised rates in a tightening process that began in March 2022. The committee decided to skip the June meeting as it assessed the impact that the hikes have had.
Since then, Powell has said he still thinks inflation is too high, and in late June said he expected more “restriction” on monetary policy, a term that implies more rate increases.
The fed funds rate sets what banks charge each other for overnight lending. But it feeds through to many forms of consumer debt such as mortgages, credit cards, and auto and personal loans.
The Fed has not been this aggressive with rate hikes since the early 1980s, when it also was battling extraordinarily high inflation and a sputtering economy.
News lately on the inflation front has been encouraging. The consumer price index rose 3% on a 12-month basis in June, after running at a 9.1% rate a year ago. Consumers also are getting more optimistic about where prices are headed, with the latest University of Michigan sentiment survey pointing to an outlook for a 3.4% pace in the coming year.
However, CPI is running at a 4.8% rate when excluding food and energy. Moreover, the Cleveland Fed’s CPI tracker is indicating a 3.4% annual headline rate and 4.9% core rate in July. The Fed’s preferred measure, the personal consumption expenditures price index, rose 3.8% on headline and 4.6% on core for May.
All of those figures, while well below the worst levels of the current cycle, are running above the Fed’s 2% target.
Economic growth has been surprisingly resilient despite the rate hikes.
Second-quarter GDP growth is tracking at a 2.4% annualized rate, according to the Atlanta Fed. Many economists are still expecting a recession over the next 12 months, but those predictions so far have proved at least premature. GDP rose 2% in the first quarter following a large upward revision to initial estimates.
Employment also has held up remarkably well. Nonfarm payrolls have expanded by nearly 1.7 million in 2023, and the unemployment rate in June was a relatively benign 3.6% – the same level as a year ago.
“It has been my view consistently, that … we will be able to achieve inflation moving back down to our target without the kind of really significant downturn that results in high levels of job losses,” Powell said.
Along with the rate hike, the committee indicated it will continue to cut the bond holdings on its balance sheet, which peaked at $9 trillion before the Fed began its quantitative tightening efforts. The balance sheet is now at $8.32 trillion as the Fed has allowed up to $95 billion a month in maturing bond proceeds to roll off. More

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 12, 2023. 
Brendan McDermid | Reuters

The Dow Jones Industrial Average just won’t stop going higher it seems like. What is behind this historical momentum for the blue chip measure created more than a century ago?
The Dow on Wednesday rose for a 13th straight day, matching its longest winning streak since 1987. If it closes higher Thursday, it would be a streak not seen since 1897 — about a year after the benchmark was created — when the Dow advanced for 14 sessions in a row. During this latest run, the Dow has outperformed, gaining 5%.

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That momentum hasn’t been seen in the broader S&P 500 and Nasdaq Composite indexes, however. Both are up just 3% since the Dow’s streak began. The S&P 500 has fallen twice in that time, while the Nasdaq has posted three losing sessions.
There are several reasons for the Dow’s streak, but none may be bigger than recession fears easing.

Stock chart icon

Dow riding 12-day winning streak

No more recession?

“So far, there’s no evidence of a recession. So as long as there’s no evidence of recession … I think the market will probably continue to melt up; people are chasing,” Steve Eisman, senior portfolio manager at Neuberger Berman, told CNBC’s “Squawk Box” earlier this week. Eisman rose to prominence for profiting from the subprime mortgage crisis. He was profiled in Michael Lewis’ book “The Big Short.”
Recession fears are easing in large part due to data showing inflation is coming down. In turn, traders are betting the Fed will stop hiking interest rates, moves that have been restraining the economy’s potential. Federal Reserve Chief Jerome Powell hinted Wednesday after the central bank hiked rates that they could hold steady at its next meeting in September.
Near the start of the Dow’s winning streak, the consumer price index, a widely used measure of inflation that tracks prices on goods ranging from food to electronics, rose just 3% on a year-over-year basis. That was less than economists expected. The next day, the producer price index, which gauges what wholesalers pay for raw goods, climbed just 0.1% in June month over month, also less than forecast.

On top of that, employment data points to a resilient economy. Companies continue to hire at a steady pace, as the most recent U.S. jobless claims data showed a decline.
The key reason strong economic data, along with weakening inflation numbers, can benefit the Dow more than other indexes is because of its make-up. Many of the stocks composing the Dow are levered to an improving economy (think American Express, Chevron, Goldman Sachs, and 3M).

Dow winners during streak

Symbol
Name
% during streak

MMM
3M Company
12.9

GS
Goldman Sachs Group, Inc.
12.5

UNH
UnitedHealth Group Incorporated
10.7

JPM
JPMorgan Chase & Co.
8.6

JNJ
Johnson & Johnson
8.3

CRM
Salesforce, Inc.
7.8

AMGN
Amgen Inc.
7.6

HD
Home Depot, Inc.
7.4

INTC
Intel Corporation
7.1

CAT
Caterpillar Inc.
6.9

Source: FactSet

Strong earnings

The smaller Dow has also gotten a boost as many of its 30 members reported strong quarterly reports.
On Wednesday, Boeing shares rallied 8% to push the index into the green. The aerospace giant reported a smaller-than-expected loss and revenue that exceeded analyst expectations. The company also said it delivered 136 planes in the second quarter, up from 121 in the year-earlier period.
Meanwhile, Coca-Cola gained 1% on Wednesday after the beverage giant raised its full-year outlook and reported better-than-expected earnings. CEO James Quincey pointed to supply chain pressures easing and added that “concern surrounding the bank sector diminished and energy prices continue to pull back from record highs.”
Industrial giant 3M also reported strong second-quarter figures, with earnings and revenue exceeding analyst expectations. The stock popped 5% on Tuesday after the results were released.
The Dow’s mechanics could also be playing a part in its rally. The average is price weighted, meaning that a stock with a higher share price will exert greater influence on the overall Dow level than one with a lower share price. The S&P 500 and Nasdaq, meanwhile, are market cap weighted — meaning stocks with higher market caps will have more sway in how the indexes trade.
Goldman Sachs, the stock with the second-highest price in the Dow, is up more than 10% this month. UnitedHealth, which has the highest price, is up more than 5.7% in that time.
Bottom line: Several factors have conspired to push the Dow into a potentially historic winning streak. More