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Fed Chair Powell speaks, Cisco earnings: What to know in markets Wednesday

The focus Wednesday will be on Federal Reserve Chairman Jerome Powell when he speaks live via webcast hosted by the Peterson Institute for International Economics at 9 a.m. ET. He is expected to discuss current issues and challenges facing the U.S. economy.

Powell’s webcast comes after the Fed’s late-April meeting in which the Committee announced that it would keep short-term interest rates near zero until it felt that the U.S. economy “weathered recent events.” Additional clues on the Fed’s outlook for the U.S. economy will be the focal point for market watchers.

“We think this is an obvious opportunity for him to provide some more color on the Fed’s thinking about the economy and the coming next phase of monetary policy after an intense focus on credit programs and market-functioning QE to date,” Evercore ISI wrote in a note to clients Tuesday. “We expect him to strike a balance between arguing that the dynamics of an economy emerging from shutdown will be different from the dynamics of an economy recovering from a normal recession and hopefully better than the dynamics of an economy recovering from a financial crisis, and discussing a series of downside risks.”

Additionally, negative interest rates will likely be a hot topic. Tuesday morning, President Donald Trump took to Twitter to voice his thoughts on negative rates in the following post:

“We expect Powell will lean against negative rates and lean in favor of the Fed’s main alternative instruments – enhanced forward guidance and regular QE/yield caps,” the firm said.

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Meanwhile, tech giant Cisco (CSCO) will report quarterly results after market close Wednesday. Analysts polled by Bloomberg expect the company to report adjusted earnings of 71 cents per share on $11.88 billion in revenue during its fiscal third quarter.

Federal Reserve Chair Jerome Powell speaks during a news conference, Tuesday, March 3, 2020, to discuss an announcement from the Federal Open Market Committee, in Washington. In a surprise move, the Federal Reserve cut its benchmark interest rate by a sizable half-percentage point in an effort to support the economy in the face of the spreading coronavirus. Chairman Jerome Powell noted that the coronavirus “poses evolving risks to economic activity."  (AP Photo/Jacquelyn Martin)

Unlike some of its peers, Cisco might have seen an outsized impact from COVID-19 due to heavy exposure to enterprise IT spending. Revenue from enterprise IT spending accounts for approximately 60% of Cisco’s total sales, half of which comes from small to medium-sized businesses. While business and overall sales will likely take a hit in the near-term due to COVID-19, analysts anticipate that Cisco’s WebEx was a bright spot for the company over the past quarter.

Shares of Cisco were down about 7% so far in 2020 while the broader market dropped 9% in the same time period.

Other notable reports include SmileDirectClub (SDC) and Jack in the Box (JACK) after market close.

Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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