US stock futures drifted slightly higher on Wednesday, ahead of the Federal Reserve's final policy meeting of the decade, amidst ongoing uncertainty surrounding US-China trade negotiations.
The Fed, which has lowered interest rates three times in 2019, will wrap up its two-day policy meeting today, in Washington, with a statement that is expected to include no changes to its benchmark interest rate of 1.5% to 1.75%.
These predictions have shifted some the market’s attention towards other risk variables, namely; the chances that Donald Trump would delay tariffs on $160 billion of China-made goods, many of them consumer products, which are set to kick in on Dec. 15.
These developments come after Tuesday’s session, where US stocks closed slightly lower, marking a cautious response to media reports that Washington and Beijing had signaled a Sunday deadline for the imposition of new tariffs on Chinese imports could be extended.
Trade negotiators from both sides have indicated in recent days that the mid-December deadline is not necessarily the final date for duties to increase on $165 billion of imports, if a so-called “phase one” deal is not reached, the Wall Street Journal reported ahead of Wall Street’s opening bell on Tuesday.
The S&P 500 closed -0.11% lower, after having oscillated between positive and negative territory. The Dow Jones and Nasdaq Composite each closed down -0.11% and -0.08% lower, respectively.
Ahead, in today’s economic calendar; the Federal Reserve's announcement on interest rates will be released at 2pm EST, followed by Fed Chairman, Jerome Powell's, press conference at 2:30pm EST.
The calendar also includes the Consumer Price Index for November at 8:30am EST and Crude Oil Inventories for the week ended Dec. 6 at 10:30am EST.
In corporate news; Lululemon Athletica (LULU), American Eagle Outfitters (AEO), Tailored Brands (TLRD), Vera Bradley (VRA) and United Natural Foods (UNFI) are all expected to report their latest earnings today.
TODAY'S TOP HEADLINES
Economics: Fed Likely to Hold Rates Steady. (The WSJ)
Federal Reserve officials are likely to hold their benchmark interest rate steady after their two-day meeting concludes Wednesday and aren’t expected to make notable changes to their wait-and-see posture on more rate reductions.
Markets & Energy: Aramco Soars in Debut to Hit Market Value of $1.88 Trillion. (Bloomberg)
Saudi Aramco shares surged after the oil producer’s initial public offering, valuing the company at a record $1.88 trillion in the culmination of a four-year effort by the kingdom to list its crown jewel.
ECONOMIC CALENDAR
Today's Economical Announcements.
08:30AM - ★★☆ - CPI (MoM) (Nov) (Previous: 0.4%)
08:30AM - ★★★ - Core CPI (MoM) (Nov) (Previous: 0.2%)
10:30AM - ★★★ - Crude Oil Inventories (Previous: -4.856M)
02:00PM - ★★★ - Fed Interest Rate Decision (Previous: 1.75%)
02:30PM - ★★★ - FOMC Press Conference
STOCKS IN THE SPOTLIGHT
Pre-Market Movers & News Related Stocks.
GameStop (GME): [EARNINGS] Reported a quarterly loss of 49 cents per share, compared to the consensus forecast of an 11 cents per share profit. Quarterly sales plunged and the company cut its full-year profit forecast, as customers delay purchase ahead of the releases of new consoles like Sony’s (SNE) PlayStation and Microsoft’s (MSFT) Xbox.
Children’s Place (PLCE): [EARNINGS] Came in a penny a share above estimates with quarterly profit of $3.03 per share. Revenue came in below forecasts, and a comparable sales increase of 0.8% was short of the 3.5% consensus estimate of analysts surveyed by Refinitiv. Children’s Place also gave a weaker-than-expected full-year forecast, saying its bottom line would be hurt by tariffs.
Ollie’s Bargain Outlet (OLLI): [EARNINGS] Beat estimates by 3 cents a share, with quarterly earnings of 41 cents per share. The discount retailer’s revenue also beat Wall Street forecasts. John Swygert, who stepped in as interim CEO earlier this month after the death of Ollie’s founder Mark Butler, was named permanent CEO.
Dave & Buster’s (PLAY): [EARNINGS] Matched forecasts with quarterly profit of 2 cents per share, with revenue beating estimates. The bottom line was impacted by a nearly 10% rise in operating expenses.
Potbelly (PBPB): [DOWNGRADE] Downgraded to “neutral” from “overweight” at Piper Jaffray following the resignation of the sandwich chain’s Chief Financial Officer Tom Fitzgerald, who left to take the same job at Planet Fitness (PLNT).
Dropbox (DBX): [NEWS] Announced that Chief Customer Officer Yamini Rangan will step down. She will remain with the cloud storage company until Jan. 3 to assist with the transition.
Home Depot (HD): [GUIDANCE] Forecast 2020 sales growth below consensus estimates, due to the fact that its “One Home Depot” strategy is not yet generating as much revenue as it had expected.
AT&T (T): [NEWS] Has entered into an accelerated $4 billion share repurchase program, with the goal of retiring 100 million shares during the first quarter of 2020.
Chevron (CVX): [NEWS] Will take a $10 billion to $11 billion charge this quarter to write down the value of its assets, due to lower commodity prices caused by a supply glut. The energy giant is also considering selling some natural gas projects.
Mednax (MD): [NEWS] Activist investor Starboard Value has nominated a slate of directors at the health-care services company, and The Wall Street Journal said Starboard is pushing Mednax to consider a sale. In a Securities and Exchange Commission filing, Mednax said it welcomes a “constructive dialogue” with Starboard.
United Parcel Service (UPS): [DOWNGRADE] Downgraded to “market perform” from “outperform” at BMO Capital Markets, which points to a challenging path to profitability and free cash flow.
The RealReal (REAL): [RATING] D.A. Davidson began coverage on the luxury goods reseller with a “buy” rating, noting its business model puts it at the leading edge of multiple trends favored by millennial and Gen Z consumers.
MOMENTUM STOCKS
GAINERS: DCP
DECLINERS: FRAN, CONN, BEN, SGMO, GWRE
TODAY'S IPOs
LIV Capital Acquisition (LIVKU) (Price: 10) (Est. Vol: $60.0M)
XP Inc. (XP) (Price: 27) (Est. Vol: $1.958B)
