U.S. Stocks Narrowly Mixed Following Fed Decision — Market Talk

1419 ET - U.S. stocks are mostly higher, but the Nasdaq falls into negative territory following the Fed's decision to leave rates unchanged. FOMC says, "Economic activity is expanding at a strong pace. While uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient." The statement says job gains have kept pace with the workforce, and the unemployment rate has changed little. There were dissents from Cook and Hammack, which BMO said recently could be a way to signal "hawkishness without forward guidance." The DJIA is up 0.2% and the S&P 500 gains 0.1% while the Nasdaq slips 0.2%. ([email protected])1355 ET - Canadian Industry Minister Melanie Joly says Cleveland-Cliffs has nine more days to respond to demands the company abide by commitments made when it acquired Ontario steelmaker Stelco. Joly adds the government contacted its lawyers to see if there may be consequences following comments made by Cliffs CEO Lourenco Goncalves in an interview with the Canadian Broadcasting Corp. Goncalves told the CBC that ahead of the acquisition Stelco had been undercutting Cliffs in the U.S. "I bought Stelco because I could not afford anymore having Stelco flooding the market here in the United States to the detriment of my own company," he said. Responding to Ottawa's call to reverse layoffs at Stelco, Cliffs this week said it is in full compliance with all commitments. ([email protected])1356 ET - StoneX analyst Mark Palmer isn't surprised that Robinhood Markets' stock is down after the company posted the highest quarterly revenue and adjusted Ebitda in its history. "The explanation is not complicated," he says in a research note, pointing to quarterly earnings that came in a nickel below Wall Street models. Revenue and monthly active users missed estimates as well, he says. However, investors shouldn't be so quick to write the quarter off, according to Palmer. He says the earnings miss was largely tied to an unrealized mark-to-market loss on Robinhood Ventures Fund I. "Strip out the venture mark and HOOD's quarter was essentially in line with our adjusted EPS estimate of $0.65," he says. StoneX maintains its buy rating and $170 price target. Robinhood is off 4%. ([email protected])1322 ET - Long-term bitcoin holders own about 4 million bitcoin that were bought between $85,000 and $118,000 apiece, according to analysts from Glassnode. That means they are generally underwater at the current price level, which is hovering about $80,000, the analysts say. More than half of all of long-term holders' coins were bought above that critical level, they say. If the price recovers toward $85,000, many of those long-term holders may sell to get their money back, the analysts say. ETF demand has faded, though each new dip now realizes smaller losses, they say. ([email protected])1156 ET - Brinker International says its investments in marketing, operations and value are spinning a powerful flywheel, keeping guests coming to Chili's. "This steady approach is why the business will continue to win," CEO Kevin Hochman says on a call with analysts. The restaurant group is forecasting another quarter of positive same-restaurant sales. "We continue to convert new guests into regular guests, which means sustainable growth regardless of the prior year comp," Hochman says. And the company has "very strong commercial and operational plans" that will keep the flywheel spinning. "While it's clear the consumer is challenged, we feel we are positioned to continue to win in this environment through market share growth," Hochman says. Shares jump 16%. ([email protected])1147 ET - Chili's has its foot on the gas, and it isn't letting up. Same-restaurant sales were up 10% across the chain during the recent quarter, driven largely by traffic. "Chili's traffic has now beat the industry in the past 12 quarters," says Kevin Hochman, CEO of parent company Brinker International. Chili's has now delivered 22 consecutive quarters of same-store growth, with the latest gain lapping a 21% increase in the same quarter last year, as well as a 14% increase in the same quarter a year before that. "Some have repeatedly said we cannot possibly continue to comp on top of big comp numbers," Hochman says. But those people, evidently, are wrong. Brinker shares are up 15%. ([email protected])1053 ET - Lennox International is struggling to stay competitive with its pricing, as entrants offering cheaper products are joining the industry, executives tell analysts on a call. Lennox, which sells heating and cooling systems, says it had to keep prices low in some markets because new competitors are offering lower-priced products. Maintaining market share is coming at a higher expense, however, because costs and energy expenses are climbing, the executives say. Much of the new competition is coming from overseas, they say. Lennox is trying to cut costs by potentially exiting some leases, reorganizing its stores network and taking other productivity measures. Lennox falls 8.4%. ([email protected])1050 ET - Economist David Watt says the Bank of Canada issued a "weak" decision in opting to lift its main policy rate by a quarter point to 2.50%. The former chief economist at HSBC Canada, in his economy-focused substack, says the BOC positioned the hike as a so-called preemptive move as current inflation gauges suggest limited spillover from higher fuel costs to nonenergy goods. "If they are now deciding that action is needed to keep inflation pressures at bay, they should be full-throated in suggesting that they will do whatever is needed," Watt argues. Instead, the BOC says it could raise rates further but will decide one meeting at a time. Watt says this signals this does not mark the start of a hiking cycle. "If rates are heading higher, have the gumption to say so," Watt writes. ([email protected]; @paulvieira)1030 ET - Investors were net sellers of U.S. equities for the second week running last week, with the communication services sector leading the outflows, according to Bank of America analysis. Clients of the bank pulled $3.5 billion from U.S. equities, continuing selling momentum after outflows of $15 billion the prior week. Retail investors drove the selling, Bank of America analysts Jill Carey Hall and Trey Brown say. The communication services sector, which includes telecoms companies and media stocks including Meta, saw its biggest weekly outflow since records began in 2018, they say. Industrial stocks saw the next largest outflows--the 13th straight week of outflows for the sector.([email protected])1026 ET - Oil futures are rising with market concerns about a Middle East escalation overshadowing the flurry of diplomatic efforts in the region. The political deadlock following Israeli elections "introduces greater uncertainty at a particularly sensitive moment for U.S./Israel-Iran relations, with higher risk of renewed military escalation," Francesco Martoccia of Citi Research says in a note. Renewed escalation could drive a further increase in the geopolitical risk premium while credible progress toward a deal could unwind part of the existing premium, he says. "This election outcome does not alter our central case of a negotiated agreement by year-end, but raises the probability of a more volatile and potentially disruptive path." WTI is up 1.8% at $101.73 a barrel Brent is up 1% at $115 a barrel. ([email protected])1000 ET - Etsy says it is spending more on social media channels where it hopes to appeal to younger shoppers. The online marketplace has shifted more spending to platforms such as TikTok, a channel where Etsy wasn't spending much just six months ago, executives tell analysts on a call. In the third quarter, half of Etsy's impressions on TikTok reached people 18 to 29 years old. The marketing strategy is part of Etsy's effort to win back buyers who may have made a purchase once on the platform, but aren't consistently engaged. ([email protected])0954 ET - Although September CPI and PPI came in hotter than expected, the AI buildout hasn't shown material signs of slowing and energy prices remain elevated, market participants still expect the Fed to hold rates steady in a target range of 3.75% to 4.00% on Wednesday. That follows comments from some senior Fed officials signaling they are in no rush to raise rates this month. "Williams' and Jefferson's comments predated the inflation surprise, and we don't believe their statements were an indirect conduit for Warsh's views to the markets, as may have been the case with past chairs," notes Oxford Economics. If the committee holds rates steady, it could draw dissents from officials such as Cleveland Fed President Beth Hammack and Dallas Fed President Lorie Logan, who have signaled that further monetary policy tightening is needed. ([email protected])