With the market intently focused on what the Fed might do in its policy setting meeting next week, stronger-than-expected economic data has tended to weigh on sentiment because of its potential to keep central bankers more on the dovish side.
Futures market expectations were relatively similar before and after the data release, with a cut of some magnitude fully priced in. More than 80% of participants were expecting a cut of 25 basis points, and less than 20% were expecting a cut of 50 basis points. Meanwhile, Intel’s shares gained more than 5% after the chipmaker beat expectations on its top and bottom lines and issued above-consensus guidance for earnings and revenue for both 3Q and the full year.
With the market so focused on what the Fed might or might not do at its meeting, strong economic data seemed to be viewed in the light of how it might affect the Fed’s decision rather than being taken as the boon it is for the broader economy. Ford’s shares fell more than 7.4% after the automaker missed Wall Street earnings estimates and issued disappointing guidance. Meanwhile, Xilinx dropped more than 3.4% despite beating earnings estimates as the chipmaker also issued disappointing guidance.