Central Bankers Talk Rate Cuts
Jobs are on their minds.
The big rotation trade took a pause on Thursday, as selling pressure expanded and all the major equity indexes closed lower.The Russell 2000 $RUT led to the downside after more than a week of small-cap outperformance, shedding nearly 2 percent.
Still, the forces that drove its historic rally over the past week-plus remain in place, including the prospect of a September rate cut.
At the same time, second-quarter earnings-reporting season is off to a solid start.
In the immediate aftermath of a geopolitics-driven selloff for just about every stock in the sector, Taiwan Semiconductor Manufacturing Company $TSM reported a 36 percent surge in net profit and raised its full-year revenue growth guidance.
TSM was up 0.39 percent on Thursday, as the iShares Semiconductor Index $SOXX rose 0.30 percent.
Management said earnings per share for the three months ending September 30 will be $5.10, topping a forecast of $4.74. Revenue will be $9.73 billion, short of a $9.83 billion estimate.
The streaming giant added 8.05 million subscribers during the second quarter versus a consensus forecast of 4.87 million.
Management also raised its full-year operating margin and revenue growth outlooks.
A number of notable names are on the earnings-reporting lineup today, including financial heavyweight American Express $AXP, regional banks Fifth Third Bancorp $FITB and Regions Financial $RF, and energy services firms Haliburton $HAL and Schlumberger $SLB.
We’ll also hear from New York Fed President John Williams and Atlanta Fed President Raphael Bostic.
On Wednesday, Fed Governor Christopher Waller echoed Fed Chair Jerome Powell’s recent admonitions about the other side of the central bank’s dual mandate.
“I do believe we are getting closer to the time when a cut in the policy rate is warranted,” Waller said, adding that the labor market is in a “sweet spot” but that the Fed needs to keep it there.
“There is more upside risk to unemployment than we have seen for a long time.”
“We don’t want to be to a point where we start to see the labor market weaken substantially, to falter,” San Francisco Fed President Mary Daly said in an interview with New York Times report Jenna Smialek, “because by then, it is actually often too late to bring it back.”
