Stocks embrace confidence data and earnings, return of confidence, earnings impress, cryptos edge lower

US stocks are rallying after consumer confidence bounces back and on strong earnings by Nike and FedEx. The news was too good today and that has made the many Grinches on Wall Street tentatively throw in the towel.

Return of Confidence

Today’s consumer confidence reading is a head-scratcher for people expecting the economy to quickly fall into a recession. ​ The Conference Board’s confidence reading surged to 108.3, crushing the consensus estimate of 101.0, and hitting the highest level in 8 months. ​ Both the present situation and expectations readings improved significantly along with upward revisions to the prior month.

The CB’s Senior Director of Economic Indicators Franco noted, “Inflation expectations retreated in December to their lowest level since September 2021, with recent declines in gas prices a major impetus.” ​ Consumer spending trends are expected to shift to services as big-ticket items cool further.

The economy is still headed towards a recession, but the consumer continues to show signs of resilience which could delay a significant tumble for equities. ​ ​

Home Sales

The data continues to deteriorate in the housing market. ​ Existing home sales declined more than expected as surging borrowing costs and weaker consumer demand holds off home purchases.

Fedex

Fedex shares are surging after the delivery giant posted the classic earnings beat and cost reduction announcement. ​ This quarter was quite the improvement from the prior one that raised concerns of weakening global demand ahead of the holiday season. ​ The results for both the top and bottom line were lower than a year ago, but an even further acceleration in cost savings is what is helping the share prices.

During the earnings call, FedEx CFO Lenz noted that volume declines should moderate as they move through the rest of the year. ​ The worst appears to be over FedEx.

Nike

Nike crushed this earnings season, inventories are improving, and their outlook going forward was rather upbeat. ​ The results from China are heading in the right direction as they’ve started to reopen.

Wall Street is liking Nike’s top and bottom-line beat, better-than-expected margins, and as inventories declined from last quarter. ​ North American sales are healthy and Chinese demand should improve going forward. ​ ​

Cryptos

Bitcoin wavers as the cryptoverse watches the latest developments with the FTX collapse. ​ Sam Bankman-Fried has agreed to be extradited to the US and we may soon find out who else in FTX will be investigated and what other companies are impacted. Bitcoin isn’t getting much of a boost from the positive risk-on environment that is running through Wall Street. ​ ​ ​ ​

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya