Stocks Rising Despite Fed’s Hawkish Comments Earlier This Week

U.S. stocks are continuing to trade higher in the final session of the week and are on pace to end a three-week losing streak. The markets are showing resiliency in the face of solidified expectations that the Fed will remain aggressive despite a slowdown in economic growth, and following yesterday's historic rate hike by the European Central Bank. Earnings news is on the positive side, with Zscaler, DocuSign, and Kroger all rallying after topping profit projections and issuing upbeat guidance. The economic front is relatively quiet, but wholesale inventories for July were revised lower. Treasury yields are rising, and the U.S. dollar is pulling back from multi-decade highs. Crude oil and gold prices are increasing. Asia finished broadly higher, and Europe also saw widespread gains.

At 12:52 p.m. ET, the Dow Jones Industrial Average is up 1.1%, the S&P 500 Index is gaining 1.4%, and the Nasdaq Composite is rallying 1.9%. WTI crude oil is advancing $3.54 to $87.08 per barrel, and Brent crude oil is increasing $3.70 at $92.85 per barrel. The gold spot price is trading $10.20 higher to $1,730.40 per ounce, and the Dollar Index is dropping 0.7% to 108.98.

Zscaler Inc. (ZS $186) reported adjusted fiscal Q4 earnings-per-share (EPS) of $0.25, above the $0.21 FactSet estimate, as revenues rose 61.0% year-over-year (y/y) to $318 million, topping the Street's forecast of $305 million. The cloud security company said despite the uncertain macroeconomic landscape which continues to evolve, it continued to see favorable demand for its Zero Trust Exchange platform because it makes businesses more secure, simplifies IT, and reduces cost. ZS issued full-year guidance that came in north of expectations. Shares are rallying nearly 20%.

DocuSign Inc. (DOCU $64) posted adjusted Q2 EPS of $0.44, above the projected $0.42, with revenues growing 22.0% y/y to $622 million, exceeding the forecasted $602 million. The e-signature company's billings and subscription revenues both topped expectations. DOCU issued full-year guidance that came in above estimates. Shares are moving nicely higher.

Kroger Co. (KR $51) announced adjusted Q2 earnings of $0.90 per share, above the expected $0.82, with revenues rising 9.1% y/y to $34.6 billion, exceeding the forecasted $34.5 billion. Q2 same-store sales grew 5.8% y/y, north of the projected 4.6% gain. The grocer said its results were propelled by its digital strategy and its ability to manage product cost inflation. KR raised its full-year guidance. Shares are trading solidly higher.

The S&P 500 Index is on track to snap a three-straight week losing streak, even as expectations remain elevated regarding continued tighter monetary policy by the Fed amid the backdrop of slowing economic growth. Last week's employment report also fostered some volatility, and Schwab's Chief Investment Strategist Liz Ann Sonders notes in her latest article, Are Jobs Livin' on the Edge?, how the August jobs report delivered something for both economic bulls and bears, but what matters more in the near term is the Fed's focus on seeing a continued easing in labor demand.