Here Are 3 Hot Things to Know About Stocks Right Now
- The Dow Jones Industrial Average fell by almost 500 points on concern a partial government shutdown could inhibit economic activity and after the Federal Reserve hiked rates for a fourth time this year.
- Walgreens Boots Alliance Inc. (WBA) fell 4.3% after it posted stronger-than-expected first-quarter earnings and maintained its fiscal-year earnings guidance.
- Altria Group Inc. (MO) confirmed Thursday it bought a 35% stake in Juul Labs Inc., the e-cigarette startup.
Wall Street Overview
Stocks tumbled on Thursday, Dec. 20, with the Dow diving almost points as concerns grew that the U.S. government would partially shut down over the Christmas holiday season because President Donald Trump won't sign a stopgap spending bill.
Shares already were down following the Federal Reserve's move Wednesday to raise its benchmark lending rate and signaled tighter monetary conditions into 2019.
Speaker of the House, Paul Ryan (R-Wis.), said Thursday that Trump wouldn't be signing the spending bill after House Republicans met with him at the White House because the bill doesn't include funding for the border wall.
The Dow dropped 467.38, or 2%, to 22,855, on track for the worst December since the Great Depression and the worst year in a decade. The blue-chip index last traded below 23,000 in October 2017. The S&P 500 fell 1.6%, and the Nasdaq slumped by 1.6%.
Fed Chairman Jerome Powell confirmed on Wednesday analysts' forecasts with a 25-basis-point increase in the fed funds rate, the fourth hike of 2018 and the eighth in the current tightening cycle. The hike was accompanied by a statement from the Fed that "some further gradual increases" would be needed for the world's largest economy next year as well, defying critics who insisted the central should examine incoming data before committing to more interest rate increases. Powell also said the $50 billion a month pace of bond sales from the Fed's $4 trillion balance sheet was "smooth" and unlikely to change.
The hawkish tone of the decision - despite the fact that Fed officials trimmed their 2019 rate hike projections to two moves from three - hammered U.S. stocks Wednesday and spilled over into the Asia session. Stocks in Japan tumbled 2.84% on Thursday, and shares in China fell 0.52%.
Investors were rattled further by moves in the bond market that suggested the U.S. economy could turn to recession in the next 18 months as the difference between two-year and 10-year Treasury note yields narrowed to less than 10 basis points in overnight trading as short-term rates rose in sympathy with the Fed's rate projections and long-term rates fell amid concerns over medium-term growth as the central bank trimmed GDP projections for 2018 and 2019.
Walgreens Boots Alliance Inc. (WBA) posted fiscal first-quarter earnings of $1.46 a share, beating analysts' estimates by 3 cents. Sales rose 9.9% to $33.8 billion. The drugstore chain maintained that it expects 7% to 12% growth in fiscal 2019 adjusted per-share earnings at constant currency rates.
Shares of the Dow component fell 5.7%.
Altria's investment gives the company a 35% stake in Juul.
The deal values Juul at more than double the roughly $16 billion valuation it received in July in a private funding round, according to Reuters.
Labatt Breweries of Canada, a subsidiary of AB InBev, will work with a Tilray unit to research non-alcoholic beverages that contain THC and CBD, both key chemicals found in marijuana but with very different purposes. THC is the psychoactive chemical in marijuana the produces the high, while CBD is non-psychoactive and blocks the high.
Each company will invest $50 million in the partnership.
Conagra Brands Inc. (CAG) fell 14.5% after the food packaging company reported mixed fiscal second-quarter results. Conagra posted adjusted earnings of 67 cents a share in the period vs. analysts' expectations of 56 cents. Revenue was $2.38 billion, which missed Wall Street's estimates of $2.41 billion.
Save 66% with our '12 Days of Holiday Deals' Sale. Join Jim Cramer's Action Alerts PLUS club for investors and get our best deal of the year. Click here for details or to sign up.