U.S. stocks are solidly lower as the markets continue to digest the economic implications of yesterday's 50-bp rate hike from the Fed. The rate hike was followed by 50-bp increases from the European Central Bank, Bank of England, and Swiss National Bank. The economic calendar also delivered a host of data points for the markets to contend with, as retail sales declined more than expected, industrial production declined, and manufacturing activity in New York and Philadelphia both contracted, though jobless claims moderated much more than expected. The equity front is relatively quiet, but Lennar Corporation posted mixed results and offered some cautious guidance, while Netflix is seeing pressure from a report about softer-than-expected ad-supported viewership. Treasury yields are mostly lower, and the U.S. dollar is gaining ground. Crude oil prices are dipping, and gold is dropping. Asia finished broadly lower, and Europe is also seeing widespread losses, with the global markets digesting mixed data and the flood of monetary policy decisions around the world.
At 10:56 a.m. ET, the Dow Jones Industrial Average is down 2.1%, the S&P 500 Index is dropping 2.2%, and the Nasdaq Composite is falling 2.6%. WTI crude oil is declining $0.57 to $76.71 per barrel, and Brent crude oil is decreasing $0.32 at $82.38 per barrel. The gold spot price is trading $30.60 lower to $1,788.10 per ounce, and the Dollar Index is advancing 0.7% to 104.43.
Lennar Corporation (LEN $90) reported Q4 earnings-per-share (EPS) of $4.55, including mark-to-market adjustments on technology investments and homebuilding impairments, and deposit write-offs. The company said excluding these items, EPS was $5.02. FactSet had estimated LEN to post earnings of $4.87 per share, on revenues of $10.17 billion, which rose 21.0% year-over-year (y/y) and compared to the Street's $9.97 billion forecast. The homebuilder's new orders and deliveries for Q4 missed estimates, and its gross margin also came in below projections. LEN issued Q1 new order and gross margin guidance that were below forecasts, though its deliveries outlook came in above expectations. Shares are trading modestly to the downside.
Netflix Inc. (NFLX $291) is dropping following a report from Digiday that the company has missed ad-supported viewership guarantees promised to advertisers and is having to offer some refunds. NFLX has not commented on the report.
The equity markets have been choppy as of late, with investors wrestling with the impact of aggressive monetary policy tightening from the Fed and how long and at what pace the Central Bank will continue to raise rates. Schwab's Chief Investment Strategist Liz Ann Sonders discusses in her article, U.S. Outlook: How Many More Times, Fed?, how Powell, among other Fed officials, has seemingly shifted his attention from the rear-view mirror to the windshield. She points out how inflation is a lagging indicator, but the impact of monetary policy changes is in the future.