Here Are 3 Hot Things to Know About Stocks Right Now

  • The Dow Jones Industrial Average ended higher Wednesday after the Fed said it would lower the overnight lending rate to a target range of 1.75% to 2%.
  • FedEx (FDX - Get Report) shares fell after the package-delivery major warned that full-year profit would likely disappoint Wall Street. FedEx is Real Money's Stock of the Day.
  • Adobe ( ADBE - Get Report)  slipped after the cloud software company forecast softer-than-expected fourth-quarter revenue.

Wall Street Overview

Stocks rebounded late in the session Wednesday, with the Dow and S&P 500 edging into positive territory right before the close after the Federal Open Market Committee, the Federal Reserve's policy-making body, said it would lower the overnight lending rate to a target range of 1.75% to 2%.

The Dow fell more than 200 points immediately after the decision was made public, but began recovering during Fed Chairman Jerome Powell's news conference. The index ended the day up a modest 36 points, or 0.13%, to 27,147.
 
The S&P also rebounded and finished up 0.03%, while the Nasdaq ended down 0.11%. 
 
JPMorgan Chase ( JPM - Get Report) , Microsoft ( MSFT - Get Report) , and Goldman Sachs ( GS - Get Report) led the Dow advance.

The Fed ended its two-day meeting at 2 p.m. ET with a 7-3 vote to lower the so-called fed funds rate -- the rate at which commercial banks and other institutions lend to one another overnight -- by a quarter point to a range of 1.75% to 2%. This was the second rate cut this year.

"Information received since the Federal Open Market Committee met in July indicates that the labor market remains strong and that economic activity has been rising at a moderate rate," the Fed said in its statement.

"Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although household spending has been rising at a strong pace, business fixed investment and exports have weakened. "

Powell, speaking at a press conference after the announcement, said that if the economy does take downturn, "then a more extensive sequence of rate cuts will be appropriate."

"We don't see that," he said. "It's not what we expect."

Wednesday's decision also came amid heightened anxiety over the Fed's New York branch injecting billions into intrabank lending markets over the past two days following abnormal spikes in overnight borrowing costs.

The New York Fed offered $75 billion in cash to broader markets on Wednesday, in exchange for eligible collateral such as U.S. Treasury bonds or mortgage-backed securities, in order to hold the Fed's key rate inside its target range of between 2% and 2.25% after overnight repo rates surged to as high as 8.5%, while the benchmark fed funds rate traded at 2.25%, the top end of the central bank's target range.
 
President Donald Trump, a relentless critic of Powell and the Fed, quickly took to Twitter to vent his frustration. 

Jay Powell and the Federal Reserve Fail Again. No "guts," no sense, no vision! A terrible communicator!

— Donald J. Trump (@realDonaldTrump) September 18, 2019

Mike Loewengart, vice president of investment strategy at E*Trade, said that while isn't too much new to digest in today's Fed announcement, "it's interesting to see an increasingly divided Fed."

"Their accommodative stance comes at a time of conflicting economic signals," he said. "While unemployment is near a 50-year low and consumers continue to ramp up spending, manufacturing output has slowed, job gains have tapered, trade tensions have stressed the economy, and the yield curve has inverted."
 
Loewengart added that "with each accommodative action, the Fed shrinks its arsenal of monetary tools."
 

Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, noted that "beneath the surface of the headline rate cut, more division amid the Fed was apparent with three voters officially dissenting - two believed that the Fed shouldn't have cut at all and one believed that the Fed should have cut more."

Zaccarelli said that the Fed kept their statement virtually the same and, when coupled with their "dot plot," a chart the Fed uses to convey its benchmark Federal Funds interest rate outlook, "may be indicating that they are done cutting rates for this year."

"We would expect the stock market to be disappointed with the implication that more rate cuts are less likely and we would also expect the dollar to strengthen for the same reason," he said. "At this time, it is difficult to be aggressively bullish; a more defensive stance in the short-run seems to be the more prudent course of action."

 
Oil prices were falling even as Trump said he would "substantially" increase U.S. sanctions on Iran following drone attacks on two Saudi Arabian oil facilities that intelligence officials have linked to Tehran.
 
Brent crude contracts were down 93 cents to $62.63 a barrel, while West Texas Intermediate contracts, which are more tightly linked to U.S. gas prices, were down $1.14 to $58.20 a barrel.

Secretary of State Mike Pompeo, speaking to reporters Wednesday in the Saudi city of Jeddah, called the airstrikes on Saudi oil facilities "an act of war" and said it was an "Iranian attack" on the world's energy supply.

Trump told reporters during a fundraising trip to California that no decision has been made yet regarding retaliating against Iran, but "there's plenty of time to do some dastardly things."

U.S. crude oil refinery inputs averaged 16.7 million barrels per day during the week ended Sept. 13, which was 788,000 barrels per day less than the previous week's average, the Energy Information Administration said. Refineries operated at 91.2% of their operable capacity. Gasoline production decreased last week, averaging 9.5 million barrels per day.
 

FedEx (FDX - Get Report)  sank 12.9% to $150.91 after the package delivery company warned that full-year profits would likely disappoint Wall Street due to the U.S.-China trade war and the loss of a major contract with Amazon (AMZN - Get Report) . FedEx is Real Money's Stock of the Day.

Shares of rival delivery company UPS ( UPS - Get Report)  were down 1.1% to $121.04.

Adobe (ADBE - Get Report) shares slipped 1.8% to $279.72 after the cloud software company forecast softer-than-expected fourth quarter revenue.


General Mills (GIS - Get Report) , the maker of Cheerios cereal and Haagen-Dazs ice cream, slipped nearly 1% to $54.53 after fiscal-first-quarter earnings beat estimates but revenue missed.

Chewy (CHWY) shares fell 6.2% to $28.39 after the online pet food retailer reported a wider-than-expected second-quarter loss.

Shares of Seagate Technology ( STX - Get Report) were up 1.3% to $56.75 after the data-storage company raised its fiscal-first-quarter earnings outlook ahead of its annual analyst meeting in New York on Thursday.

Meanwhile, the Business Roundtable said its members forecast U.S. economic growth this year will clock in at 2.3%, CNBC reported, down from last quarter's estimate of 2.6%. The group blamed tension with China and the stalled free-trade agreement with Mexico and Canada for the downbeat assessment.

Housing starts in the U.S. jumped 12.3% to a seasonally adjusted annual rate of 1.364 million units in August, the highest level since June 2007, the Commerce Department said. Data for July was revised to show homebuilding falling to a pace of 1.215 million units, instead of decreasing at a rate of 1.191 million units as reported earlier.

Economists had forecast housing starts would advance to a pace of 1.250 million units in August. Building permits increased 7.7% to a rate of 1.419 million units in August, the highest level since May 2007.

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