Market Brief Powell Whipsaws Markets Apple Earnings on Tap

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The Federal Reserve initially delivered a “hawkish cut,” reducing interest rates by 0.25% to the 1.50-1.75% range, though Chairman Powell noted that monetary policy is now “in a good place” and that it would take a “material reassessment” of the central bank’s outlook to change policy from here. However, many markets reversed their initial moves when he noted that it would take a significant rise in inflation before the central bank considers an interest rate hike.
Separately, the Bank of Canada left interest rates unchanged at 1.75% as expected, though dovish comments from Governor Poloz suggest that the central bank was considering an “insurance cut” to rates.
Chile cancelled the planned APEC summit in November, where Presidents Trump and Xi were planning on signing the “Phase One” trade deal. China has reportedly offered to hold a signing event in Macau instead.
FX: The loonie was the weakest major currency on the back of the BOC and falling oil prices. The Swiss franc was the strongest major.
US data: US GDP (Q3) printed at 1.9%, above expectations of 1.6% growth, though the accompanying inflation readings were lower than anticipated. ADP employment (Oct) printed at 135k vs. 110k expected and a revised 93k last month.
Commodities: Oil fell -1% on the day to hit a 1-week low after a surprisingly large build in inventories. Gold rallied about 0.5%.

US indices closed higher on the day, supported by the perception of a “Powell Put” if economic data worsens.
Utilities (XLU) were the strongest sector, while Energy (XLE) was the weakest, falling more than -2% on the day.
Stocks on the move:
- Apple (AAPL, +0%) is poised to report earnings as we go to press.
- Facebook (FB) reported $2.12 in EPS vs. $1.88 expected. Revenues also came in stronger than expected at $17.65B vs. $17.45B eyed. The stock is trading up 3% in after hours trade on the initial reaction.
- General Electric (GE) gained +12% after it forecast better cash flow in 2020 on the back of its renewable energy division.

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