Dow Jones Futures Fall On ‘Day 2’ After Market Rallies Strongly On Powell Hints

Dow Jones futures fell modestly early Thursday, along with S&P 500 futures and Nasdaq futures, with Meta Platforms and Qualcomm reporting earnings.

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The stock market rally had big gains Wednesday after the Federal Reserve hiked rates by 75 basis points for a second straight meeting. Fed chief Jerome Powell signaled that policymakers are looking toward slowing the pace of tightening down the road, even as the economy remains stressed and inflation focused.

The major indexes already were modestly to strongly higher, fueled by positive reactions to earnings from Microsoft (MSFT), Google parent Alphabet (GOOGL) and Enphase Energy (ENPH).

Sen. Joe Manchin, D-W.V., announced a deal with Senate Majority Leader Chuck Schumer late Wednesday on a reconciliation bill with tax, climate and energy provisions. The deal, which could face a number of hurdles, includes a 15% minimum corporate tax rate, drug price controls, ObamaCare subsidy increases and pro-solar and green energy provisions. Solar and fuel-cell stocks were among the winners. The legislation would extend EV tax credits, which should be good news for Tesla (TSLA), General Motors (GM), though there are various income and vehicle price limits on the credits.

Fed Meeting

The Federal Reserve raised rates by 75 basis points on Wednesday afternoon, lifting the rate to a target of 2.25%-2.5%.

The central bank slightly downgraded its view of the economy, noting that “spending and production have softened.” But “job gains have been robust” while “inflation remains elevated.”

Fed chief Powell, speaking after the Fed meeting, stressed that policymakers are “strongly committed to bringing inflation down.” He said the economy is “resilient” with labor markets “extremely tight.”

Powell said it will likely be “appropriate” to slow Fed rate hikes as they become “more restrictive.” He expects Fed rates to be “moderately restrictive” by year-end, which he said would be in the 3%-3.5% range.

After the Fed rate hike and Powell’s comments, the odds of a 50-basis-point move on Sept. 21 rose to 56% from about 50-50 before the Fed announcement. Further out, markets expect modest moves over the year’s final two Fed meetings, to end the year around 3.25%-3.5%.

Key Earnings

Meta Platforms (META) and Qualcomm (QCOM) headlined key earnings, with chip-equipment maker Lam Research (LRCX), ServiceNow (NOW), O’Reilly Auto (ORLY), Ford Motor (F) and Teladoc Health (TDOC) also reporting late Wednesday.

Meta stock retreated solidly after the Facebook parent missed on earnings, reported its first-ever revenue decline and guided low.

Qualcomm stock fell modestly early Thursday on weak revenue guidance.

LRCX stock fell slightly after better-than-expected quarterly results.

NOW stock tumbled as the business software giant cut subscription revenue guidance after slightly beating Q2 views.

Ford stock popped after easily beating views, with a 423% EPS gain.

ORLY stock fell after earnings fell short and the auto parts retailer guided lower.

TDOC stock plunged after the telemedicine specialist guided to the low end of full-year targets. Teladoc reported a huge Q2 loss due to a big impairment charge, though revenue slightly…