Fed Chair Powell Eases Market Tensions

Fed Chair Jay Powell has helped ease tensions in his first appearance before U.S. Congress this morning. Amid a month of sometimes wild market volatility based on inflation/interest rate hikes at the Federal Reserve, Powell took a calm approach in presenting his view of the domestic economy: “monetary policy moves are helpful,” “inflation is low and stable,” “exports and fiscal policy are now market headwinds” and, perhaps most importantly, he expects “further gradual rate increases” going forward.

This testimony hasn’t really moved the pre-markets, but it may go some way toward soothing those market participants fearful of the unknown in a suddenly more turbulent trading space. Powell speaks — or will officially speak at 10am ET this morning — of gradual increases to interest rates, meaning quarter-point hikes, and likely no more than three this year, where some analysts were looking for four.

Lots could change between here and there, of course, but Powell looks to be captaining the ship much the way the last skipper, Janet Yellen, had: with careful, measured policy changes equipped to keep from rattling the markets. Compare this to Yellen’s predecessor, Ben Bernanke, and his first day speaking on the Hill — lack of clear understanding what the Fed Chair was indicating led to a volatile ride in the market almost immediately.

Macy’s Reports, Shares Up 10%

Ahead of the opening bell, one of the big players in big-box retail, Macy’s Inc. (NYSE:M) reported Q4 earnings that outperformed the Zacks consensus estimate: $2.82 per share versus the $2.69 we were looking for. Sales in the quarter were lower than expectations — $8.67 billion from the $8.72 billion consensus — but year-over-year comps were up 1.4% from the expected +0.1%, indicating a stronger holiday shopping season.

This may translate into better Q4 earnings results for other key holiday shopping destinations, as well. For Macy’s, pre-market activity likes this bottom-line beat very much, sending the stock up 9.8% at this hour.

Durable Goods Orders Fall

A fresh read on Durable Goods was worse than expected, at -3.7%. We’re not seeing this metric affecting market futures either, however — all major indexes are in moderately negative territory right now, following a big day of regular trading Monday. Notably volatile transportation equipment orders fell 10% and defense capital goods -26.3% go a long way in explaining these results. Stripping out transportation demand, Durable Goods for January reaches a more tepid -0.3%.