Stocks wavered on Wednesday, Sept. 20, with investors given little impetus to move higher until the Federal Reserve announces policy decisions on interest rates and its balance sheet.
The Dow Jones Industrial Average was down 0.03%, the S&P 500 slipped 0.02%, and the Nasdaq fell 0.12%. All benchmark indexes closed at records a day earlier -- the Dow for the sixth day in a row and the S&P 500 for its third.
The Federal Open Market Committee, the decision-making arm of the Fed, will wrap up its meeting on Wednesday afternoon after talking policy for two days. A policy announcement is expected at 2 p.m. ET and a press conference from Chair Janet Yellen is expected shortly after.
Investors are fairly certain in what they expect out of the Fed, but need the confirmation. Markets have priced in a zero chance of change to U.S. interest rates, but near-certainty to the Fed beginning to unwind its $4.5 trillion balance sheet. The latter creates the same kind of tightening conditions as a rate hike.
"If the signals are right, then this week should mark the point when the ... Fed finally begins the long-overdue process of unwinding its bloated balance sheet," said Aberdeen Standard Investments investment manager James Athey. "That would make it a milestone in the post-crisis monetary experiment."
Fed funds futures are currently pricing in a nearly 61% chance of a 25-basis-point increase at the December meeting of the Fed, putting the federal funds rate at 1.25% to 1.5%.
Existing home sales fell 1.7% in August to a seasonally adjusted pace of 5.35 million. The drop was its first in five months as tight supply restricted demand. Economists had expected a reading of 5.44 million.
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Crude oil stockpiles ballooned again in the past week as the fallout from Hurricane Harvey continued. U.S. crude inventories rose by 4.6 million barrels in the past week, according to the Energy Information Administration. The previous two weeks have shown a large increase in stockpiles as Harvey crippled refinery production in the Texas and Louisiana region. Gasoline and distillates stocks declined.
West Texas Intermediate crude was up 1.5% to $50.23 a barrel on Wednesday.
The death toll following a massive earthquake in central Mexico continued to climb. Rescuers searched for survivors of Mexico's deadliest earthquake in decades as the number of confirmed fatalities stood at 217, according to the Associated Press. The magnitude-7.1 quake on Tuesday struck on the 32nd anniversary of the 1985 earthquake that killed thousands.
In more weather-related devastation, Puerto Rico was bracing for Hurricane Maria landfall, just days after Hurricane Irma caused severe destruction. The Category 4 storm was downgraded, though it's still expected to bring winds of up to 155 mph and cause more damage than Irma.
Adobe Systems Inc. (ADBE) - Get Report fell nearly 5% even after fiscal third-quarter earnings from the software company topped Wall Street estimates. Net income in the quarter was 84 cents a share, up from 54 cents a year earlier. Adjusted earnings were $1.10 a share, topping forecasts of $1.01. Revenue rose to $1.84 billion; analysts expected $1.82 billion.
FedEx Corp. (FDX) - Get Report was higher after the shipping giant posted fiscal first-quarter earnings below analysts' expectations, blaming the miss on a cyber attack at TNT Express and Hurricane Harvey. Adjusted first-quarter earnings for FedEx were $2.51 a share, below Wall Street estimates of $3.09. The company also lowered its adjusted earnings forecast for fiscal 2018.
Shares of General Mills Inc. (GIS) - Get Report tumbled 4% after the maker of Cheerios posted fiscal first-quarter profit and sales that missed expectations. Earnings of 71 cents a share missed consensus by a nickel, while revenue slipped nearly 4% to $3.77 billion. Organic sales declined by 4%, while gross margins slipped by 230 basis points to 35.1%.
Bed, Bath & Beyond Inc. (BBBY) - Get Report tumbled 15% after a disappointing quarter. Second-quarter profit slumped to 67 cents a share from $1.11 a share a year earlier, coming in well below targets of 93 cents. Sales of $2.99 billion missed estimates of $3 billion. The homewares retailer said restructuring charges, a new method of accounting, and the impact of Hurricane Harvey had impacted the bottom line.
Ford Motor Co. (F) - Get Report announced plans to trim production at five North American assembly plants through the rest of 2017 as demand for new vehicles in the U.S. slips because of lower gas prices.
Ford plans a two-week shutdown at its plant in Flat Rock, Michigan, which makes the Mustang and Lincoln Continental, and a one-week shutdown at its Michigan Assembly Plant, which makes the Focus and C-Max small cars. The automaker also plans to idle Transit van production at its Kansas City, Missouri, plant for two weeks. The company also plans shutdowns of up to three weeks at two plants in Mexico.
U.S. sales at Ford have declined 4% through August compared with the same period a year ago.
3M Co. (MMM) - Get Report declined after JPMorgan cut its rating to underweight from neutral, though raised a price target to $201 from $185. Analyst Stephen Tusa said the risks tied to slowing demand in auto and electronics should undercut a recent rally. In a note, he said "We see a negative skew on the risk reward, with potential downside catalysts including negative consensus revisions and stubbornly weak U.S. price performance which would reinforce concerns around channel disruption."
Pfizer Inc. (PFE) - Get Report was a gainer on the Dow after Morgan Stanley upgraded its rating to overweight from neutral and raised its price target on the stock to $39 from $35. Analyst David Risinger wrote in a note that "underperformance" had led to an upgrade and that the stock shows "favorable risk-reward and M&A optionality." Tax reform could lead to better deal opportunities.
Apple Inc. (AAPL) - Get Report dropped more than 1% on reports it had confirmed the new Apple Watch had encountered connectivity issues. The Apple Watch Series 3 is the first model to independently connect to networks, rather than through an iPhone.
In a statement to The Verge, Apple said its new watch had issues connecting to cellular networks when already using unauthenticated Wi-Fi networks without connectivity. Apple said it was "investigating a fix for a future software release."
Updated from 10:11 a.m. ET, Sept. 20.
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