Breakfast News: All Eyes on the Fed

Source: Image Created by Jester AI.

1. Federal Reserve in Focus

President Donald Trump's attack on U.S. Federal Reserve Chair Jerome Powell shows no sign of letting up ahead of the March Personal Consumption Expenditures (PCE) index print due today, now alleging he's "not really doing a good job."

• Three or four interest rate cuts predicted: Nobody really expects the Fed to lower interest rates at its next meeting on May 7, but the CME Fedwatch tool now shows more than half of respondents expect a cut in June followed by another in July.
• Prices rising again?: Some economists think core PCE -- which excludes food and fuel and is the Fed's key measure, as it's more responsive and best reflects consumer behavior -- might rise to 2.7% year over year.

2. Softening Tariffs Stance?

Both sides in the U.S. versus China tariff battle could be pulling back from the brink. Negotiators remain tight-lipped over whether talks are actually happening and who might be first to budge. But a Reuters report suggests China has made a list of U.S. products it could exempt from its proposed 125% tariffs on American-made goods.

• Weaker first-half economy: The trade deficit in goods climbed to a record high in March as importers stocked up ahead of tariffs. But that's unlikely to help GDP, as analysts now expect a sharp decline in the last quarter.
• S&P 500 up 11% since 52-week low: The S&P 500 posted its worst first-100-days performance under a new administration since Richard Nixon's second term in 1973. But since closing at a low on April 8, the index has rebounded. It pays not to panic.

3. Tuesday Results You Might Have Missed

Starbucks (SBUX 1.29%) missed second-quarter expectations. Revenue gained 2.3%, but adjusted earnings per share slumped 40% after operating expenses rose 12%. The stock looks set to open around 6% down today, as investors start to expect no real recovery until fiscal 2026. There's a 2.9% dividend yield forecast.

• "Consumer spending remained resilient": Visa (V 1.21%) CEO Ryan McInerney noted little impact from macroeconomic uncertainty as the payments processor posted Q2 revenue and earnings beats. The company launched a new $30 billion share buyback.
• Venmo revenue up 20% year over year: PayPal (PYPL 2.19%) beat Q1 earnings estimates but fell short on revenue, as total payment volume increased 4%. Management kept full-year guidance unchanged but suggested it would have raised it if it weren't for economic uncertainty.

4. Earnings Updates to Watch Today

Eyes will be focused on the benefits of big artificial intelligence spending when Microsoft (MSFT 0.74%) posts a Q3 update after the market closes. Microsoft's Noelle Walsh has said the company is "slowing or pausing some early stage projects." A Q1 update from Meta (META 0.96%) could be overshadowed by antitrust threats.

• Down 13% year to date: Etsy (ETSY 0.52%) will report its fiscal first quarter before today's opening bell. This comes after mixed Q4 results showed an earnings beat, with revenue falling slightly short. Etsy plans technological investments and expansion.
• Boosting health with AI: GE Healthcare (GEHC 0.01%) is due to report Q1 before the market opens. Initially building X-ray machines as part of General Electric (GE -0.09%), the company was spun off independently in 2023 and is developing AI to boost its medical imaging technologies.

5. Foolish Fun

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