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RSM Chief Economist Joseph Brusueras: Warsh delivered the right hawkish signals at the press conference and attempted to reinforce the Fed’s credibility in restoring price stability, while also enhancing his own credibility.U.S. stocks continued to decline after the Walsh press conference, with the S&P 500 falling 1%, its biggest drop since July 29, the Dow Jones Industrial Average down 1.65%, and the Nasdaq Composite down 0.6%.On September 17th, Federal Reserve Chairman Warsh declined to answer questions at a press conference regarding his interactions with US President Trump. Trump has been calling for lower interest rates in recent months. Warsh stated, "I have no comment on my discussions with the president." White House Council of Economic Advisers Chairman Christopher Phelan said on Tuesday that raising interest rates would be a "mistake."On September 17th, Federal Reserve Chairman Warsh stated that he would not disclose details of future interest rate decisions by the Federal Open Market Committee (FOMC). He said, "I am not responsible for providing forward guidance. Our decision today (to raise interest rates) is a carefully considered, serious, and responsible one. We have been preparing for and thinking about this decision for the past 110 or 120 days." Warsh also stated that this decision was not market-driven. He said, "Our decision today is based on our assessment of the current situation, our judgment of the employment trend, and our assessment of the strength of the economy. Sometimes, the market tries to anticipate our decisions. I watch market prices to see what information the market is sending. But todays decision is our own."On September 17th, Warsh stated that while the Federal Reserve cannot prevent price shocks in commodities such as oil on its own, the central bank can use policy tools to prevent further spread of inflationary pressures. Warsh said, "We cannot influence the price of any single commodity, such as oil or groceries." However, he pointed out, "We can and will ensure that any changes in relative prices do not spread further, and do not have second- or third-order effects on the economy. Thats our responsibility, and thats what were doing." Warsh made these remarks as U.S. diesel prices hit a record high due to the Iran war.

Why is HP stock down by 6% today?

Larissa Barlow

Apr 01, 2022 09:56

Tips

  • Morgan Stanley lowers its PC sales forecast and downgrades HP and Dell.

  • The pandemic's demand boost may have worn off, and PC sales may revert to their normal downward trajectory.

  • HP stock may require additional upside catalysts to return to recent highs above $40.

  • HP stock is under pressure following an analyst downgrade.


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HP shares fell after Morgan Stanley downgraded the stock owing to concerns of sluggish PC sales. Dell was also downgraded.

 

Morgan Stanley predicts that hardware budgets could be reduced, hurting HP sales. Furthermore, demand may drop as the world returns to normalcy following a two-year epidemic that boosted PC consumption.

 

The market reacted cautiously to the analyst downgrade, and HP stock fell from $40 to $36. HP stock attempted to close above yearly highs yesterday, but the downgrade definitely harmed the positive momentum.

What Is the Future of HP Stock?

Analysts estimate HP to report earnings of $4.28 per share this year and $4.43 per share the next year, thus the stock is trading at only an 8 ahead P/E ratio, which appears to be low for the current market situation.

 

However, Dell is even cheaper with a forward P/E of 7, indicating that the market does not have a strong taste for computer hardware firms.

 

Concerns about declining demand may ultimately put greater pressure on HP stock in this climate. Companies and people that updated their hardware in 2020–2021 may be hesitant to renew it, and PC sales may revert to their former downward trend.

 

This is a significant risk for HP stock, which may require other favorable catalysts to return to its recent highs. At the same time, the stock's present valuation levels may provide some support in the approaching trading sessions.

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