Here Are 3 Hot Things to Know About Stocks Right Now
- The Dow Jones Industrial Average was trading to the downside Friday, ending the blue chip index's five-day winning streak.
- General Motors Co. (GM - Get Report) jumped 7% after the company said 2018 earnings will exceed the automaker's previous expectations and it raised its 2019 profit forecast.
- Netflix Inc. (NFLX - Get Report) rose 4% to $337.60 on Friday, after an analyst at UBS raised his rating on the streaming giant to buy from neutral and lifted his price target to $410.
Wall Street Overview
Stocks were lower on Friday, Jan. 11, as the equity rally to begin the new year failed to materialize for a sixth day despite a dovish message from the chairman of the Federal Reserve and amid renewed hopes that trade talks between the U.S. and China will deliver a near-term deal.
Fed Chairman Jerome Powell reiterated Thursday in a question-and-answer session at the Economic Club of Washington that the central bank would be "patient" with raising interest rates.
"We have the ability to be patient and watch patiently and carefully as we see the economy evolve and figure out which of these two narratives is going to be the story of 2019," Powell said.
Later Thursday, U.S. Treasury Secretary Steven Mnuchin told reporters that the current U.S. government shutdown wouldn't slow the progress of trade talks between Washington and Beijing, and that China's vice premier, Liu He,"will most likely come and visit us later in the month" in order to keep the discussions going.
Denting sentiment was the partial shutdown of the U.S. government, which has entered its 21st day, matching the length of the longest government closure in U.S. history.
The Dow Jones Industrial Average fell 6 points, or 0.02%, to 23,996, the S&P 500 fell 0.01%, and the Nasdaq was down 0.21%. Stocks on Thursday finished higher for the fifth straight session, and the gains moved the Dow and S&P 500 out of correction territory.
U.S. consumer prices slid 0.1% in December, dropping for the first time in nine months as gasoline prices fell, the Labor Department said. The consumer price index for all items was up 1.9% over the past 12 months.
The moderate inflation rate could ease pressure on the Federal Reserve to maintain its three-year-long campaign to boost interest rates. Typically, the central bank raises borrowing costs to cool economic growth and keep inflation from spiking during times of expansion; as businesses hire more workers, wages typically rise, and those added costs are often passed on to consumers.
General Motors said Friday it expects adjusted earnings in 2019 of between $6.50 and $7 a share. Adjusted free cash flow is expected to be between $4.6 billion and $6 billion, the automaker said.
In the shorter term, GM said 2018 EPS will be higher than initially forecast in its third-quarter earnings report. GM had guided for profit of between $5.80 and $6.20 a share.
Analyst Eric Sheridan cited Netflix's strong subscriber numbers and a better understanding from investors about the company's challenges and emerging competition.
Analysts at Credit Suisse, meanwhile, boosted their estimate for Netflix's fourth-quarter subscriber additions.
Credit Suisse analysts said they expect the company added 9.75 million users to its platform over the three months ended December, well ahead of the Netflix's guidance of 9.4 million.
Activision Blizzard Inc. (ATVI - Get Report) was falling 9.37% after the videogame company announced it ended a partnership with Bungie Inc., a studio that developed the popular online shooter franchise "Destiny."
Activision disclosed in an 8-K filing that Bungie would "assume full publishing rights and responsibilities for the Destiny franchise. Going forward, Bungie will own and develop the franchise."
The two companies had signed a 10-year contract in 2010.
The relationship between the two had been showing strain for years, according to the Los Angeles Times.
Starbucks Inc. (SBUX - Get Report) fell 0.7% after Goldman Sachs cut its rating on the stock to "neutral," citing concerns over the pace of growth in China, where the world's biggest coffee chain has targeted a significant expansion.
Goldman analyst Karen House also clipped her price target on Starbucks by $7 to $68 a share, but said she remains "reasonably confident" the company's move to drive more digital engagement can support comparable-sales growth in the United States of between 3% and 4%. However, House also noted "incremental concerns" regarding slowing China growth, where Starbucks plans to double its store footprint to 6,000 over the next four years.
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