Stocks Up Sharply, All Eyes On The Fed Tomorrow  Image: Bigstock Stocks closed sharply higher yesterday with all of the major indexes in the green. The Dow led the way gaining 1.58%. After a rotten week last week, the market was due for a bounce. And this was a great start. Before the open yesterday we got earnings from Western Digital (positive EPS surprise of 6.38%), McDonald's (positive EPS surprise of 6.33%), and ON Semiconductor (positive EPS surprise of 2.96%). But not all had a positive price response as WDC and MCD were up 7.37% and 1.72% by the close. But ON closed down -21.76% as weaker demand, especially from European automotive customers, weighed on last quarter's earnings and guidance. After the close we heard from Pinterest and they posted a positive EPS surprise of 33.3%, and a positive sales surprise of 2.67%. They were up in 3.04% in the regular session before earnings, and jumped more than 12% in after-hours trade. We also heard from Public Storage and they posted a positive EPS surprise of 2.85%, and a positive sales surprise of 5.36%. They were up 0.10% in the regular session before earnings. They were up more than 1.60% in after-hours trade.
Today we'll get 165 companies on deck to report including Pfizer, Amgen, and Caterpillar before the open. And Advanced Micro Devices, First Solar, and Chesapeake Energy after the close. We'll also hear from Stellantis (before the open). The UAW reached an agreement with Ford last week, and Stellantis over the weekend. (Not with GM yet.) We will see how the strike affected Stellantis' earnings and outlook when they report. In other news, yesterday we got the Dallas Fed Manufacturing Survey. The General Activity Index declined to -19.2 vs. last month's -18.1. The Production Index slipped to 5.2 vs. 7.9. Today we'll get the Employment Cost Index, the Case-Shiller Home Price Index, the Chicago PMI, and Consumer Confidence. But the two reports everybody is really waiting for is Wednesday's FOMC announcement, and Friday's Employment Situation report. The Fed is widely expected to keep rates steady when they meet on Wednesday, November 1. Although, they do have another meeting in December. So once we get past Wednesday, the focus will shift to what happens next. But Fed Chair, Jerome Powell, and several of his colleagues have acknowledged that rising yields, especially on the long bond, have tightened financial conditions significantly in recent months, and that may preclude the Fed from having to tighten further. In regard to the jobs report, this is an important one as well. This is a proxy for the economy. But it has been running hot, in spite of the Fed's historic rate hike cycle. In fact, it's been so strong, even in the face of rising interest rates, that Fed Chair, Jerome Powell had commented with seeming incredulity that rates have risen to 5% while the unemployment rate is still so low. As I mentioned up top, it was a rough week last week. Quite frankly, it's been a rough several months. The market was due for a bounce. And we got it yesterday. We will see if the market can build upon it this week. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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