Stocks were trading lower Wednesday, ahead of an expected Federal Reserve interest-rate cut, while a flood of quarterly corporate results continued to come in mixed, but better than some analysts had feared.
What are major indexes doing?
The Dow Jones Industrial Average was down about 25 points at 27,046, while the S&P 500 was off 4 points at 3,036=3. The Nasdaq was about half a point higher, around 8,264.
The S&P 500 SPX, -0.01% notched an all-time intraday high Tuesday morning, but ended slightly lower after equities lost steam. The large-cap index, which posted a record close on Monday, lost 2.53 points Tuesday, or 0.1%, to end at 3,036.89. The Dow DJIA, +0.07% gave up 19.30 points, or 0.1%, to finish at 27,071.42, while the Nasdaq Composite COMP, -0.10% shed 49.13 points, or 0.6%, closing at 8,276.85.
What’s driving the market?
The Federal Reserve will be in the spotlight Wednesday. Policy makers are widely, but not universally, expected to lower the fed-funds rate by a quarter percentage point, the third cut this year. The key question is the signal the central bank and Chairman Jerome Powell will send regarding prospects for additional cuts. Traders have scaled back bets for further reductions later this year and in 2020.
Read: 3 things to watch from the Fed meeting
Also see: Meet the lonely economist who thinks the Fed might just leave interest rates unchanged
With a quarter-point rate cut reflected up to 95% in asset prices, there “ is only a little upside potential left to be explored on the interest rate front,” said Ipek Ozkardeskaya, senior market analyst at London Capital Group, in a note.
That means the Fed statement “is what matters the most to investors at today’s decision announcement. The sweet blend of better-than-expected third-quarter earnings and the progress in trade negotiations with China suggests an increased likelihood of a hawkish Fed statement,” she said.
Indeed, some investors contend a signal the Fed is moving to the sidelines could rob equities of a source of support that’s helped them to rally back to record territory. The Fed is set to announce its policy decision at 2 p.m. Eastern, followed by Powell’s news conference at 2:30 p.m.
Also read: Can the stock market march higher without the promise of more Fed cuts?
Don’t miss: Here’s how the stock market tends to perform after the Fed cuts rates 3 times in a row
Earnings have been “fine,” and trading activity in the past few weeks has been all about re-positioning, said Sahak Manuelian, head of equity trading for Wedbush Securities. As some political headwinds ease up and central banks remain accommodative, traders “are feeling like, I’m too far into staples and defensives, and I need to have some exposure to cyclicals.”
Market breadth has also been improving, Manuelian said, helping to confirm some of the march higher for stock prices. And the better-than-expected third-quarter U.S. gross domestic product report is another sign that consumers aren’t slowing down, Manuelian told MarketWatch.
U.S. goss domestic product, the official scorecard for the economy, grew at an 1.9% annual pace in the third quarter, the Commerce Department said Wednesday, down just a tick from 2% growth in the spring. Confident consumers kept the U.S. economy humming along in the third quarter, spending more than enough to counter a big drop in business investment tied to falling oil prices and the ongoing trade war with China.
See: Confident consumers keep U.S. economy humming along, GDP grows 1.9% in third quarter
Private-sector employers added 125,000 jobs in October, payroll processor ADP said, spot on the consensus forecast.
Markets were also waiting to hear about a re-scheduling for the anticipated Asia-Pacific Economic Cooperation meeting, where U.S. President Donald Trump intended to meet Chinese president Xi Jinping to continue trade talks. China suggested the talks take place in Macau, according to a Fox News report.
Earlier Reuters reported that the interim trade agreement between the U.S. and China might not be completed in time for signing at the upcoming APEC meeting and that the Trump administration’s demand that Beijing commit to buying more U.S. agricultural products has become a major sticking point in negotiations.
What companies are in focus?
Investors continue to wade through the busiest week of earnings season.
General Electric Co. GE, +10.58% shares jumped nearly 11% after it narrowed its third-quarter loss.
Yum Brands YUM, -8.28% reported earnings in line with expectations ahead of the opening bell, but the stock was trading sharply lower mid-morning.
Royal Caribbean Cruises Ltd. RCL, -3.70% shares jumped in early trading despite missing expectations for both per-share earnings and revenue, but then slid about 2% lower.
Shares of Molson Coors Brewing Co. TAP, -2.29% were down more than 2% after it said 2019 revenue would be flat to slightly down.
Shares of Advanced Micro Devices Inc. AMD, -0.90% were lower in morning action after the chip maker delivered third-quarter earnings late Tuesday that were in line with estimates and said it expected about the same for the current quarter.
See: AMD looks like a bright star in a darkened chip sector
In other corporate news, Fiat Chrysler Automobiles NV FCAU, +0.84% FCA, +8.77% and Peugeot maker PSA Group of France UG, +2.69% confirmed they are in talks over a potential combination, which would create a $46 billion trans-Atlantic auto giant that would rank as the world’s fourth-largest by volume.
Anixter International Inc. AXE, +14.72% said Wednesday it has agreed to be bought by an affiliate of private-equity firm Clayton, Dubilier & Rice in a deal valued at $3.8 billion. CD&R would pay $81 for each share of the network and electrical products company, a 13% premium to Tuesday’s closing price of $71.40. Shares surged 14%.
Results from Apple Inc. AAPL, -0.31% are due after the bell, along with earnings from Facebook Inc. FB, -0.65% and ride-hailing company Lyft Inc. LYFT, -0.57%.
What are other markets doing?
U.S. Treasury yields slipped ahead of Fed policy decision. The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, -2.01% was three basis points lower, at 1.80%. The price of West Texas Intermediate crude oil CL00, -1.64% was down 2 cents, 1.1%, to 54.92.
Gold for December delivery GCZ19, +0.42% on Comex rose $5.70, or 0.4%, to trade at $1,496.30 an ounce, ahead of the Fed decision.
Oil futures extended earlier losses on Wednesday after the Energy Information Administration reported a larger-than-expected weekly U.S. crude-supply increase of almost 6 million barrels, but gasoline inventories declined a bit more than forecast. West Texas Intermediate crude for December delivery CLZ19, -1.64% was down 51 cents, or 0.9%, at $55.03 a barrel on the New York Mercantile Exchange. Front-month December Brent crude BRNZ19, -0.93%, which expires at Thursday’s settlement, fell by 38 cents, or 0.6%, to $61.21 a barrel on ICE Futures Europe.
In Asia, the China CSI 300 000300, -0.49% lost 19 points, 0.5%, to 3,891.23. The STOXX Europe SXXP, -0.03% dipped less than a point to 398.22.