Federal Reserve Chair Janet Yellen's said in a speech Thursday that said interest rates will likely move upward later this year as part of efforts to keep the economy healthy. Guy Adami, managing director of stockmonster.com, said on CNBC's "Fast Money" show said if the Fed is waiting on inflation data, it will likely be disappointed. The time for that rate hike was last week.
Tim Seymour, managing partner of Triogem Asset Management, said stocks would have likely gone up had the Fed acted at its September meeting. The U.s. dollar has been gaining strength, while the U.S. economy remains on "very solid footing," he said. Yellen said she wants to hike rates this year, which is helping to remove some of the uncertainty in the market, he added.
Karen Finerman, president of Metropolitan Capital Advisors, said the Fed is watching the global economy closely, which appears unlikely to improve in the short term and thus make it hard for the Fed to consider hiking in October or even December.
Dan Nathan, co-founder and editor of riskreversal.com, added that global economies don't turn on a dime. He doesn't think the Fed will hike and if it does do it in October, it will be only to please investors. That would be a bad decision, he said.
Caterpillar (CAT) - Get Report lowered guidance and announced it will cut 5,000 jobs by the end of 2016. Shares fell 6.3% in response. The company constantly disappointments and revenue has declined for four straight years, Finerman explained. The mining and energy sectors are horrible right now, so the underperformance is understandable. It's hard to see a bottom in those sectors, so it's hard to see a bottom for Caterpillar.
A lot of commodity-based companies have been cutting budgets and stopping or delaying new projects, Seymour said. This will help create a better supply/demand balance, which will ultimately help prices.
Seymour is long the stock, and said the only negative right now is the valuation. But valuation alone is not enough of a reason to sell Nike because the company is doing so well. It's also good to see the Chinese are still spending even as other parts of the economy are slowing.
Trading at 25 times next year's earnings estimates, Adami doesn't find Nike all that expensive based on its growth. Margins remain strong and future orders are impressive. He said the stock can go higher.
Finerman is long Foot Locker (FL) - Get Report and expects the company to do well, too, given how well Nike did in the prior quarter. Finish Line (FINL) is also likely to impress because athletic apparel is selling so well, she said.
Corinna Freedman, an equity analyst at BB&T Capital Markets, said almost half of Nike's earnings beat came from a reduction in tax rate. But beyond that the company did very, very well. Gross margins improved, showing pricing power, while EBIT results, particularly for China, came in much better than expected.