Dow Jones falls 200 points
Fed leaves interest rates unchanged
Apple shares jump following strong earnings
TSX up 50 points
It was a rough day for U.S. benchmarks, with all three major indices slipping.
The U.S. Federal Reserve met to discuss monetary policy, keeping interest rates unchanged but pointing to higher inflation rates going forward.
The Dow Jones fell nearly 200 points and the S&P 500 was down around 20 points.
The Nasdaq ended the day more than 30 points lower.
In contrast, the TSX was up nearly 50 points, boosted by the energy sector.
Canadian energy giant Suncor Energy Inc (NYSE:SU), the second-largest energy producer in the country, beat analyst estimates on quarterly profit.
Apple Inc (NASDAQ:AAPL) was one of top gainers, jumping 4.7% to US$177.17 after reporting strong second-quarter earnings after the bell on Tuesday.
GPS maker Garmin Ltd (NASDAQ:GRMN) saw shares jump more than 5% to US$62.23 after reporting better-than-expected first-quarter earnings. The company reported earnings of US$0.68 per share verus Wall Street estimates of US$0.56.
Unum Group (NYSE:UNM) was one of the top decliners, falling 17% to US$39.73 after disappointing first-quarter earnings. While the insurance company beat revenue estimates, its earnings per share fell short.
Molson Coors Brewing Co’s (NYSE:TAP) earnings report also sent its shares falling to a 52-week low, down more than 15% to US$60.64. The beer company reported earnings per share of US$0.48, below analyst estimates of US$0.80
Afternoon update:
US benchmarks are in the red in early afternoon as investors wait on the minutes from the latest Federal open Market Committee meeting later this afternoon (2pm ET).
Few fireworks are expected – there’s not even a scheduled press conference afterwards – and policymakers aren’t likely to hike interest rates again this time around.
Instead, traders will be looking for clues on the Fed’s outlook for inflation and the economy, as well as for more clarity on whether two or three rate rises are on the cards for the rest of this year.
Even a 4.2% rise (to US$176.21) for Apple Inc (NASDAQ:AAPL) shares couldn’t lift the Dow Jones Industrial Average into the black.
The tech giant unveiled a huge US$100bn buyback as it beat forecasts with its second-quarter earnings, but that wasn’t enough to propel the index, which is down 50 points, or 0.2%, to 24,045.
Beer maker Molson Coors Brewing Co (NYSE:TAP) lost its fizz – down 12.6% to US$62.66 – as it wildly missed expectations with its latest quarterly earnings.
Molson Coors was one of the top fallers on the S&P 500, which is down 3.7 points, or 0.1%, to 2,651.1 shortly after 1pm in New York.
Apple’s earnings beat couldn’t inspire the wealth of tech stocks on the Nasdaq Composite though, with the index broadly flat at 7,131.
Things are looking better among the small caps, with the Russell 2000 index climbing 8.8 points, or 0.6%, to 1,559.1.
HC2 Holdings Inc (NYSE:HCHC) was the index’s top riser, jumping more than a third to US$7 after one of it sold off one of its subsidiaries in a deal worth up to US$1bn.
Morning report:
US benchmarks opened Wednesday’s trading session lower as worries about an expected interest rate rise surfaced and another round of earnings reports were interpreted by investors.
Shortly after the opening bell, the Dow Jones had lost 35 points at 24,063 while the S&P 500 shed 5 points to 2,650. The tech-heavy Nasdaq slightly bucked the trend to climb 9.65 points to 7,140, led by Apple Inc, and up in Toronto, the TSX was also trading higher, up 45 points to 15,663.
On the list of early winners was Juniper Networks Inc. (NYSE:JNPR), which was up 5% in the wake of first-quarter results that came in ahead of analyst estimates.
Apple (NASDAQ:AAPL) shares were also up over 4% after the iPhone maker reported revenue of US$61.1bn and earnings of US$2.73 a share – which were both ahead of consensus.
On the list of early laggards were Unum Group (NYSE:UNM) and Molson Coors Brewing (NYSE:TAP), which fell 14.4% and 11.5% respectively after reporting disappointing quarterly results.
Investors will be watching the conclusion of the two-day meeting of the Federal Reserve closely and gauging the possible impact on yield spreads as well as any signs that the monetary policy makers will look to introduce three other interest-rate increases this year in addition to the one expected this week.
On the earnings front, the wave of corporate reports keeps on coming with Tesla’s earnings out today and HSBC’s set for Friday.
In other news, the yield on ten-year Treasuries inched up less than one basis point to 2.97% while gold jumped 0.2% to US$1,307.1 per ounce.
West Texas Intermediate crude oil, meanwhile, inched down 0.2% to US$67.14 per barrel.
Pre-market trade:
Stocks were expected to open firmer on Wednesday, helped by better than expected earnings from consumer electronics giant Apple Inc (NASDAQ:AAPL).
After rising 7 points yesterday to close at 2,655, the S&P 500 was tipped to open a little below 2,659 this morning.
The Dow Jones, which shed 64 points to close at 24,099 on Tuesday, was seen opening at around 24,164.
READ Apple announces US$100bn share buyback as 2Q earnings beat estimates on strong services growth
Apple Inc (NASDAQ:AAPL) shares surged 4% in pre-market trading after the world’s largest company topped expectations with its fiscal second-quarter results and announced a staggering US$100bn share buyback.
In fact, with the money Apple has and is returning to shareholders, it could have bought AT&T, Boeing, Oracle, Coca-Cola, Procter & Gamble or Walt Disney. OUTRIGHT. pic.twitter.com/r9RDotDUYK
— Robin Wigglesworth (@RobinWigg) May 2, 2018
Investors are bracing themselves for a barrage of earnings reports today, with the likes of Molson Coors, Chesapeake Energy, Estee Lauder and Yum Brands reporting.
Earnings results in the US: ADP, Apache, Clorox, Estée Lauder, Garmin, Harris Corp, Kraft Heinz, Mastercard, MetLife, Molson Coors, Norwegian Cruise Line, Tesla, Wyndham and Yum! Brands
— Análisis Banorte (@Analisis_Fundam) May 2, 2018
Shares in Molson Coors Brewing Co (NYSE:TAP) were proving about as popular as a warm lager in pre-market trading, sliding 5.1% to US$68 after the company served up a short measure with its first quarter earnings.
Earnings per share of 48 cents were well below the 78 cents the market had been expecting.
The $TAP has run dry for Molson Coors? Brewer's sales and profits missed forecasts. Weak demand in the US. $TAP down 5% #premarket.
— Paul R. La Monica (@LaMonicaBuzz) May 2, 2018
In contrast, Chesapeake Energy Corporation (NYSE:CHK) was wanted, rising 3.7% to US$3.09 in screen-based trading after the oil and gas exploration company's adjusted earnings per share (EPS) comfortably beat the consensus forecast.
Analysts had penciled in a figure of 27 cents for EPS; Chesapeake topped that with EPS of 34 cents.
Estée Lauder Companies Inc (NYSE:EL) scrubbed up well with its first quarter numbers. Shares in the cosmetics company were up 1.8% at US$147.55 on the back of adjusted EPS that was 10 cents higher than market expectations at US$1.17.
Traders were tucking into the shares of fast-food restaurants operator Yum Brands Inc *NYSE:YUM) after it reported first quarter adjusted EPS of 99 cents, versus expectations of 68 cents.
On the macro front, investors will be fretting today about the outcome of the meeting of the policy makers at the Federal Reserve.
“The interest rate decision from the Fed is expected later in the session on Wednesday and while no change is expected at this meeting, traders will be paying very close attention to the accompanying statement for clues on the number of rate hikes this year. The chances are, the Fed won’t stray too far from previous messaging and, if it decides to warn of the possibility of a fourth hike this year, it will probably do so in the economic projections next month,” suggested Craig Erlam at Oanda.
Elsewhere in the world, Asian markets were mostly lower overnight but markets in Europe this morning were generally on the up.
In Tokyo, the Nikkei 225 closed 35 points lower at 22,473 while in Hong Kong the Hang Seng tumbled 85 points to 30,724.
In Europe, the UK's FTSE 100 index was up 29 at 7,550 while in Germany the DAX had a storming morning session, rising 147 points to 12,759.
On the foreign exchange markets, the dollar was little changed against a weighted basket of currencies.
In the futures markets, gold was US$4.20 higher at US$1,311 an ounce while West Texas intermediate was 17 cents firmer at US$67.42 a barrel.