Morning Movers: Amazon Rises, Roku Slumps, Dick’s Sporting Goods Drops

Nothin’ Doing. The S&P 500 was barely budging on Wednesday after logging yet another new high on Tuesday, while the Dow Jones Industrial Average begins the day just 2.1% short of a record. Canada remains the focus after the U.S. and Mexico reached a preliminary trade deal earlier this week, while the U.S. economy was even stronger than initially thought during the second quarter. In today’s Morning Movers, we…

•…ponder whether the market is betting on a less aggressive Federal Reserve;
•…explain why Roku (ROKU) is dropping;
•…review Dick’s Sporting Goods’ (DKS) financial results.

Fed Watch

The market moves the way it wants to move, yet financial professionals are always trying to find the next narrative to explain what’s happening–or what’s going to happen.

That’s especially true today, when the market is basically doing nothing. S&P 500 are unchanged, while Dow Jones Industrial Average futures have ticked down 11 points. Nasdaq Composite futures have risen 0.1%.

The S&P 500 is sitting at new highs, and much of the credit is being given to the easing of trade tensions between the U.S. and Mexico. But Nicholas Colas, co-founder of DataTrek Research, is already looking past trade and his gaze has settled on the U.S. Federal Reserve. To Colas, Fed Chairman Jerome Powell’s speech at Jackson Hole this past Friday, which praised Alan Greenspan for letting the market run in the 1990s, “read like a central banker more enamored of lower-for-longer than pushing an aggressive tightening agenda.”

If that’s the case, then the market’s estimate for rates at the end of 2019–sitting near 2.675%–might be more accurate than the Fed’s own median forecast of 3.375%. “Global equity markets seem to be catching on, in no small part due to Chair Powell’s speech, and embracing the notion that the Fed will be revising its rate outlook in the coming months, Colas writes. “While that doesn’t guarantee a year-end melt up (never count your money when you’re sitting at the table), it is about as bullish a baseline scenario as we can imagine.”

Of course, talking about an less-aggressive Fed just as U.S. second quarter GDP was raised to 4.2%, from an initial 4.1%, feels a little strange, doesn’t it?

The market works in mysterious ways.

Morning Movers

Dick’s Sporting Goods (DKS) has slumped 8.1% to $33.43 after reporting a sales miss trumped better-than-expected earnings.

Hewlett Packard Enterprise (HPE) has rallied 1.8% to $17.04 after reporting consensus-beating earnings and sales.

Kansas City Southern (KSU) has risen 1.4% to $120 after getting upgraded to Outperform from Market Perform at Cowen.

Roku (ROKU) has dropped 3.5% to $60.77 on reports that (AMZN) will launch a new video app for its Fire TV devices. Shares of Amazon have risen 1.2% to $1,956.01. Also boosting Amazon: Morgan Stanley raised its target on the stock to $2,500 from $1,850.

Royal Caribbean Cruises (RCL) has gained 2% to $122.50 after getting raised to Buy from Hold at Deutsche Bank.

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