Today in the Market (2/1/2023)

Good Evening! Following the Federal Reserve’s most recent interest rate hike and Fed Chair Jerome Powell’s assertion that “disinflation” is developing in the economy, tech stocks rose.

The Nasdaq Composite rose by 2.00%, leading the markets higher in response to Powell’s remarks. The S&P 500 finished higher by 1.05% while the Dow Jones climbed by 0.03%.

IS THIS GOODBYE?

Netflix (NFLX) has disclosed the first specifics of its crackdown on password sharing. Netflix accounts will continue to be shared but within a primary household (The U.S. may be next up in the first quarter).

Thus, Netflix will ask customers to choose a “primary location” for all household accounts. When a user logs in from a device that is not part of the main location, or if the account is repeatedly accessed from another location, the account is likely to be blocked.

To avoid this… the primary account holder must validate the device using a temporary code. Once validated, the traveling member has seven consecutive days to stream Netflix. It is unclear if you may obtain several temporary codes beyond seven days to avoid paying for a second account.

There is more in the works… In addition to a crackdown on password sharing, Netflix will depend on its newly introduced ad-supported tier to boost profitability, particularly as competition in the streaming industry intensifies.

A SLOWDOWN IN HIKES

The Federal Reserve hiked short-term interest rates by 25 points, increasing its benchmark rate to a new range of 4.50% to 4.75%, the highest level since October 2007.

A brief review… After raising rates by 50 basis points in December and 75 basis points at each of its four meetings from June through November — the quickest pace since the 1980s — the Fed’s 25 basis point rate rise represents a further slowing of its rate-hiking pace.

However, still signs of more hikes in the future. In its policy statement, the Fed said “ongoing increases” in interest rates will likely be appropriate to obtain a monetary policy stance that is “sufficiently restrictive”. But, there is a change in tone because… Jerome Powell was considerably positive about the inflation future, stating, “We can now say for the first time that the disinflationary process has started.”

New year, same mission. The Federal Reserve reiterated its commitment to its long-term objectives and monetary policy approach for price stability, maximum employment, and moderate long-term interest rates.

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