Plus, the Fed is releasing minutes from its last meeting today, Target shares are surging, and Lowe’s beat earnings estimates.
Stocks slipped lower to start Wednesday with the Dow dropping 110 points, or 0.4%. The S&P traded 0.3% lower, while the Nasdaq dipped 0.1%.
The phase one trade deal is looking increasingly in doubt as talks between the U.S. and China are in danger of reaching an impasse over China purchasing farm products on the one hand and the U.S. removing tariffs on the other. Further complicating the matter, the U.S. senate unanimously passed a bill yesterday afternoon aimed at supporting protestors in Hong Kong while also warning China against a violent suppression of the demonstrations, a move that has been met with ire from Beijing. China threatened today to impose “strong countermeasures” if the bill is signed into law by President Donald Trump, and urged the U.S. to stop meddling in Hong Kong affairs. The editor of China’s Global Times tweeted that “few Chinese believe that China and the U.S. can reach a deal soon.”
In today’s public hearings in the ongoing impeachment inquiry, the House Intelligence Committee is hearing from Gordon Sondland, the U.S. ambassador to the European Union. Sondland has said in his testimony that President Trump directed Rudy Giuliani to pursue a “quid pro quo.” “Mr. Giuliani demanded that Ukraine make a public statement announcing investigations of the 2016 election/DNC server and Burisma,” Sondland said in his opening statement. “Mr. Giuliani was expressing the desires of the president of the United States, and we knew that these investigations were important to the president. …I know that members of this Committee have frequently framed these complicated issues in the form of a simple question: Was there a ‘quid pro quo?’ As I testified previously, with regard to the requested White House call and White House meeting, the answer is yes.” The ambassador also said that he told Vice President Mike Pence about his concerns that military aid to Ukraine was tied to the demand for investigations. “The suggestion that we were engaged in some irregular or rogue diplomacy is absolutely false,” Sondland said. “Everyone was in the loop.”
The Federal Reserve will release the minutes from its last meeting later today, and they could show a divided committee over interest rate policy. “About half of the regional Fed presidents didn’t want this rate cut,” said Diane Swonk, chief economist at Grant Thornton. “The pushback will be very evident which will be an interesting contrast to this week’s tweets” from President Trump. Swonk also said that whether the Fed eases rates again could be dependent on whether the U.S. can strike a deal on trade. “[The minutes] are going to show the reluctance and rate cut fatigue within the Fed… they’ll stay on the sidelines as long as they can. If there is some sort of detente in the trade war and he can get some certainty going forward that they’re won’t be any additional tariffs, that would keep them on hold,” Swonk said.
Target shares are up more than 12% this morning after the big-box retailer reported earnings results that topped analysts’ estimates, and raised its profit forecast for the year. Target reported earnings per share of $1.36 on revenue of $18.67 billion, compared to analyst expectations of earnings per share of $1.19 on revenue of $18.49 billion. CEO Brian Cornell said the Q3 results offered “further proof of the durability” of the company’s investment strategy as the retailer has an “unmatched suite of easy and convenient fulfillment options,” including curbside pickup, same-day delivery with its Shipt network, and its buy online, pick up in store option.
Another retailer that’s up this morning is Lowe’s. The home improvement retailer is up more than 4% this morning after it delivered an earnings beat and raised its forecast for the year, even as revenue fell short of estimates. Lowe’s reported Q3 earnings per share of $1.41 on revenue of $17.39 billion, compared to expectations of earnings per share of $1.35 on revenue of $17.68 billion. The company said it expected to earn $5.63 to %5.70 per share in fiscal 2019, compared to a prior forecast of $5.67 per share. “We were pleased with the performance of our U.S. home improvement stores, which reflects a solid macroeconomic backdrop and continued progress in our transformation driven by investments in customer experience, improved merchandise category performance, and continued growth of our Pro business,” said CEO Marvin Ellison in the earnings release.
Stocks We’re Watching
JinkoSolar Holding Company (NYSE: JKS): JinkoSolar shares are up 6.57% this morning after climbing as much as 19% yesterday. The solar manufacturer jumped after reporting its Q3 earnings results, with revenue up 8.2% year-over-year and gross margin up 21.3% in the quarter. Kangping Chen, CEO of JinkoSolar, said in the company’s earnings release, “I’m pleased to report strong operational and financial results for the third quarter which I believe marks a turning point for our business, as we begin to increasingly benefit from our technology transformation, industry-leading cost structure and expanding mono capacity. Module shipments during the quarter were 3,326 megawatts, an increase of 12.6% year-over-year and a slight decrease sequentially.”
Athenex Inc (NASDAQ: ATNX): Shares of this biopharma gained more than 40% yesterday after the company announced it will be presenting at the San Antonio Breast Cancer Symposium on December 13, discussing its Oraxol drug candidate for the treatment of metastatic breast cancer. “We look froward to presenting additional data and analyses at SABCS from the pivotal Phase III study of Oral Paclitaxel in metastatic breast cancer,” said Athenex Chairman and CEO, Dr. Johnson Lau. “We are excited by the opportunity to share these updates with oncologists, patients and researchers to highlight Oral Paclitaxel’s potential to positively impact outcomes for people living with metastatic breast cancer.”