Stocks Dropping Amid a Host of Economic Reports

U.S. stocks are falling sharply, giving up yesterday's rally. The markets continue to contend with the ultimate impacts of aggressive monetary policy tightening globally. Earnings reports disappointed, as Micron Technology and CarMax both missed earnings estimates and lowered their guidance. A host of economic reports were released, as jobless claims came in below estimates, while Q3 GDP and Personal Consumption were revised higher. Additionally, the Leading Economic Index declined more than anticipated, and manufacturing activity in the Kansas City region fell further into contraction territory. Treasury yields are mixed, and the U.S. dollar is ticking higher, while crude oil and gold prices are declining. Asian stocks finished mixed and markets in Europe ended the day lower as the international markets continued to digest recent central bank actions.

At 12:50 p.m. ET, the Dow Jones Industrial Average is down 2.0%, the S&P 500 Index is falling 2.5%, and the Nasdaq Composite is dropping 3.3%. WTI crude oil is losing $0.97 to $77.32 per barrel, and Brent crude oil is dipping $0.51 at $82.07 per barrel. The gold spot price is trading $24.30 lower to $1,801.10 per ounce, and the Dollar Index is advancing 0.4% to 104.52.

Micron Technology Inc. (MU $49) reported an adjusted fiscal Q1 loss of $0.04 per share, compared to the FactSet estimate of a $0.02 per share shortfall, as revenues fell 46.8% year-over-year (y/y) to $4.09 billion, versus the Street's forecast of $4.13 billion. The chip company cited challenging conditions but said its strong technology, manufacturing and financial position put it on solid footing to navigate the near-term environment, and it is taking decisive actions to cut its supply and expenses. MU added that it expects improving customer inventories to enable higher revenue in the fiscal second half, and to deliver strong profitability once it gets past this downturn. The company issued Q2 guidance that was below expectations. Shares of MU are declining.

CarMax Inc. (KMX $55) posted Q3 earnings-per-share of $0.24, well below the expected $0.65, with revenues falling 23.7% y/y to $6.51 billion, south of the forecasted $7.16 billion. The company said combined retail and wholesale used vehicle sales were down 28.0% from the same period a year ago. KMX lowered its capital expenditure outlook and paused its share repurchase program, given its Q3 performance and continued market uncertainties. Shares are falling.

The equity markets remain choppy amid uncertainty regarding the economic impact of aggressive monetary policy tightening from the Fed. This has caused recession worries and volatility in the markets to ramp up. The Schwab Center for Financial Research discusses the recent volatility in the latest article, Stock Market Volatility: Fed Concerns to the Fore. Additionally, Schwab's Chief Investment Strategist Liz Ann Sonders discusses in her article, U.S. Outlook: How Many More Times, Fed?, how Powell, among other Fed officials, has seemingly shifted his attention from the rear-view mirror to the windshield. She points out how inflation is a lagging indicator, but the impact of monetary policy changes is in the future.