U.S. Stocks Open Cautiously Higher after Tuesday’s Sell-Off; UNFI Plunges -28%, Fed Hike Speculation Grows
On March 8th, 2023, U.S. stocks opened cautiously higher after Tuesday’s sell-off induced by Fed Chair Powell’s remarks. The Nasdaq 100 (NDX) and the Dow Jones Industrial Average (DJIA) were up 0.1% and 0.08% while the S&P 500 (SPX) declined by 0.02%, respectively, at 9:30 a.m. EST.
The mixed results came after new numbers on the job market led investors to believe that higher rate hikes are more likely. February’s private payroll numbers were more robust than anticipated, further emphasizing the economy’s robustness. Powell reiterated his warning to legislators that the central bank might raise interest rates higher than was previously thought.
United Natural Foods Inc (UNFI) plunged more than -28% in premarket trading Wednesday after the grocery wholesaler reported fiscal second-quarter profit that missed by a wide margin, as “rapidly accelerating inflation” took a bite out of results. The company reported Q2 adjusted EPS of 78 cents, well below the consensus of $1.43, and cut its full-year adjusted EPS forecast to $3.05-$3.90 from a prior estimate of $4.85-$5.15, weaker than the consensus of $4.97. US Foods Holding Corp (USFD) and Sysco (SYY) both closed down more than -3% and -1% on the news.
The February jobs report was more robust than anticipated, leading investors to think that a higher interest rate increase is probable at the upcoming 2023 Federal Open Market Committee (FOMC) gathering set for March 21-22. The markets are forecasting that the Federal Open Market Committee (FOMC) will increase the interest rate by 0.50% in The market’s anticipated terminal interest rate is now estimated to be in the range of 5.50% to 5.75%.
Other news included Tesla (TSLA) closing down more than -3% after Berenberg downgraded the stock to hold from outperform. Crowdstrike Holdings Inc (NASDAQ:CRWD) gained more than 3% after the cybersecurity firm reported better-than-expected quarterly results, and Shoals Technology (SHLS) gapped down 8.6% in heavy volume after the solar company announced a 24.5 million-share secondary offering of common stock at 24.
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