Plus, fresh economic data was released this morning, Chile canceled the summit where the U.S. and China were expected to sign their phase one trade deal, and GE shares are soaring.
Stocks were slightly lower to start Wednesday with the Dow down 30 points, or 0.1%. The S&P 500 slipped 0.1% while the Nasdaq lost 0.2%.
The Federal Reserve is widely expected to reduce its benchmark interest rate by 25 basis points today. Their decision will be announced at 2:00PM EST, with Chairman Jerome Powell’s news conference on the decision scheduled for 2:30PM EST. The market will be looking for clues about where the Fed will go from here, though expectations for another rate cut in December are down to just 23%. “I think, in [Powell’s] mind, he had two or three insurance cuts. This is the third, and then he sits back and waits,” said Peter Boockvar, CIO at Bleakley Advisory Group. “The question today is whether Powell is up to the task of portraying a neutral Fed when they really do not want to was again in the near future,” added Nation Alliance’s Andrew Brenner.
Better-than-expected economic data was released this morning. The Commerce Department said U.S. GDP grew at an annualized rate of 1.9% in Q3, beating estimates of 1.6%. The surprise growth was driven by consumer spending which came in at 2.9%, while government spending grew at a 2% annualized rate. Private payrolls also grew at a faster-than-expected clip in October, with ADP and Moody’s Analytics saying that companies added 125,000 employees this month, 25,000 more than expected. One weak spot, however, was that gross private domestic investment continued to decline in Q3 with a fall of -1.5%. Business spending in particular weighed on this metric with spending on structures sinking by -15.3%, and spending on equipment falling by -3.8%. “For manufacturers, the biggest challenges remain finding skilled labor and trade uncertainties, which make it difficult to hire and expand business operations,” said Chad Moutray, chief economist at National Association of Manufacturers.
It looks like the phase one trade deal between the U.S. and China really won’t be signed in Chile next month after all. Chile President Sebastián Piñera said today that the country is calling off the Asia Pacific Economic Cooperation (APEC) summit that was supposed to take place in Santiago in November due to ongoing protests. President Donald Trump and Chinese Premier Xi Jinping were expected to sign the phase one according at the summit, though doubts have risen that the deal would have been written in time. The cancellation “suggests that the trade war uncertainty might be hanging over us for longer,” said Torsten Slok, chief economist at Deutsche Bank AG. “It raises the risk that would could never see a phase two or phase three.”
Earnings season marches on today, with Apple, Facebook, and Starbucks all reporting after the bell. General Electric shares are up nearly 12% at the time of writing after the industrial conglomerate reported an earnings beat this morning and raised its 2019 cash flow forecast. On a non-adjusted basis, GE still lost $9.5 billion in Q3, but earnings per share came in at $0.15 on revenue of $23.36 billion, compared to estimates for earnings per share of $0.11 on revenue of $22.93 billion. “Our results reflect another quarter of progress in the transformation of GE,” said the company’s CEO and Chairman, Larry Culp. “We are raising our industrial free cash flow outlook again even with the external headwinds from the 737 Max and tariffs.”
Shares of videogame maker Activision Blizzard are up more than 1% this morning after it said its Call of Duty: Modern Warfare game had world-wide sales of more than $600 million in its first three days since launch. “Call of Duty is once again the top selling new premium game of the year, proving the enduring nature of the franchise across console, PC, mobile, and esports,” said CEO Bobby Kotick. “In its first three days of release, Call of Duty: Modern Warfare more than doubled the box office opening of Joker,” the Warner Bros. film that grossed $96 million in its first three days in theaters last month. Activision’s new Call of Duty game set new sales records for highest preorder sales, highest three-day sales on the PlayStation Network digital store, which offers downloads for the PlayStation 4 console, and the game is also the best launch on PC for the franchise.
Stocks We’re Watching
Harmonic Inc (NASDAQ: HLIT): Harmonic shares are up nearly 19% since Monday after the video delivery technology and services provider reported its Q3 results yesterday. Harmonic beat on revenue earnings reporting Q3 revenue of $115.7 million, up 15% over the same period last year. “We delivered strong revenue growth and record earnings, powered by the growing success of our CableOS solution, said CEO Patrick Harshman.