Chipotle Misses On Earnings; Disney Reports Tonight

Key Takeaways

• Base Case Unchanged For Fed
• Chipotle Earnings Disappoint
• Disney Earnings Tonight

Jerome Powell spoke Tuesday for the first time since last Friday’s much stronger than expected jobs report. Speaking before the Economic Club of Washington, D.C., the Chairman of the Federal Reserve said the process to lowering inflation will take time and bring challenges. He reiterated his base case that more interest rate hikes are necessary; however, the expectations by markets remained unchanged, seeming to reflect the notion that what has been done has been effective.

Prior to Powell’s appearance Tuesday, markets were relatively quiet. But that didn’t last. In the immediate aftermath of his talk, markets rallied only to then sell off before finally staging a strong rally to close the day. The S&P 500 gained over 1% while the Nasdaq Composite was up nearly 2%. The volatile swings may be indicative of a market that’s extremely sensitive to any comments by the Fed. If that is indeed the case, then the rest of this week could prove interesting with members of the Fed speaking today and then again on Friday.

On the earnings front, Chipotle reported overnight. The company missed both on profits and the all-important same store sales metric. Combined with a relatively humble outlook for Q1, the stock is trading down approximately 5% in premarket activity. Meanwhile, Uber
UBER
issued a positive earnings report, sending the stock higher. In premarket trading, Uber is indicated higher by nearly 8%. Then tonight after the close we’ll hear from Disney.

It was just back in November when Bob Iger returned to the helm at Disney. Therefore, this will be the first time investors get to hear about his plans to restore the magic, so to speak. For the year, Disney stock is up nearly 29%.

Elsewhere, eBay
EBAY
announced plans to cut 500 jobs. That represents about 4% of their employees and continues a trend of large scale layoffs. What’s interesting here is that most companies which have announced layoffs saw positive reactions to their stock price. However, in the premarket, eBay is unchanged. On a more positive note, CVS Health
CVS
announced plans to acquire Oak Street Health for about $9.5 billion in cash. The deal expands CVS’ push into primary care by giving it control over 160 primary care centers owned by Oak Street. Shares of CVS are indicated roughly 2% higher in premarket.

For today, I’ll be watching to see what, if any, reaction markets have to Fed members Williams and Barr speaking. I’m curious if markets continue demonstrating sensitivity similar to yesterday or if the temperature drops some. I’m also interested to hear from Bob Iger and his plans for Disney. As always, I would continue sticking with your investment plans and long term objectives.

tastytrade, Inc. commentary for educational purposes only.