U.S. stocks slipped Thursday, showing few signs of recovering from Wednesday’s losses following a Federal Reserve decision and commentary that failed to placate markets.
raise the benchmark interest rate 25 basis points to between 2.25% and 2.5%, increasing the cost of borrowing money and affecting rates for home mortgages, credit cards and auto loans. But the Fed’s dot plot for next year now points to a median of two rate hikes in 2019, from three previously. Federal Reserve Chairman Jerome Powell signaled that the Fed has now arrived at the lower end of the neutral rate range, or a level which would neither overly stimulate nor slow the economy.
Investors have been digesting a plethora of commentary from the Federal Open Market Committee’s policy statement and Powell’s press conference yesterday.
“Powell’s press conference, while remaining upbeat, highlighted some dark clouds on the horizon: growth in other economies has moderated, and financial conditions have become less supportive of growth,” JPMorgan analyst Michael Feroli wrote in a note.
Feroli said Powell’s statements came across as “generally more dovish” than the FOMC statement. But he added that one area where Powell “firmly batted down expectations of a dovish turn was balance sheet normalization: he dismissed any idea that they were contemplating using the balance sheet to respond to incoming data.”
implored the Fed to freeze this action, tweeting: “Stop with the 50 B’s.”
Bonds on the long end of the yield curve continued to decline Thursday morning. The yield on the 10-year Treasury note fell 1.8 basis points to 2.758%, narrowing the spread between the 2-year note to 9.8 basis points as of 9:40 a.m. ET. The yield on the 30-year Treasury note fell 3.9 basis points to 2.974%.
STOCKS: Budweiser brewer teams up with Tilray to research cannabis drinks, Marlboro-maker takes a stake in Juul
MO) announced Thursday that it sealed a $12.8 billion investment in Juul, taking a 35% stake in the e-cigarette company valued at $38 billion. Altria, which makes Marlboro cigarettes, said it will provide Juul with shelf space and access to Altria’s customers, as well as access to the company’s about 230,000 retail locations. S&P Global Ratings downgraded Altria’s issuer credit and issue-level ratings on unsecured debt to BBB from A- following the investment, while stating that the outlook remains stable. S&P noted that the stake in Juul, along with the previously announced investment in Cronos, will produce a debt-to-EBITDA ratio slightly under 3x for Altria. Shares of Altria fell 2.53% to $50.12 each as of 9:37 a.m. ET.
WBA) delivered quarterly adjusted earnings that beat analyst expectations. However, the stock fell after the company said it will be aggressively cutting costs in a plan to save $1 billion per year within three years, which will lead to restructuring and other charges. Same-store retail sales for consumer items including toiletries and cosmetics fell 3.2% in the quarter, which Walgreens said was due to de-emphasizing certain products including tobacco. Shares of Walgreens fell 2.48% to $71.47 each as of 9:38 a.m. ET.
CAG), which houses brands including Marie Callender’s, Gardein and Slim Jim, reported quarterly net sales of $2.38 billion, missing estimates of $2.41 billion. However, the company beat estimates for earnings per share from continuing operations, delivering 67 cents per share versus 56 cents anticipated. But the packaged food company said it sees adjusted EPS for the full year of between $2.03 to $2.08, where the consensus estimate had called for $2.13 per share. Conagra’s stock fell 5.81% to $27.40 per share as of 9:38 a.m. ET.
BUD), the maker of Budweiser and the world’s largest beer brewer, said Wednesday that it is partnering with Canadian cannabis company Tilray (TLRY) to research cannabis-infused drinks. The companies said they will invest a combined $100 million to research non-alcoholic drinks containing tetrahydrocannabinol, or THC, and cannabidiol, or CBD. Shares Tilray rose 5.9% to $75.23 each as of 9:38 a.m. ET, while shares of AB InBev rose 0.34% to $69.04 each.
ECONOMY: New unemployment claims rose less than expected last week
Department of Labor said in its weekly statement Thursday. This represented an increase of 8,000 from the previous week’s level of 206,000, a level that had neared a 49-year low. Consensus economist expectations had called for initial jobless claims to register at 215,000 for the week ending December 15.
Continuing claims rose to 1.688 million for the week, higher than the 1.661 million from the week prior and the 1.663 million expected.
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