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Fly Intel - End of Day Brief - Wednesday Jan 29, 2020

Stocks end near flat as Fed maintains interest rate range

Stocks finished nearly flat as investors reacted to earnings reports from a number of mega-cap companies, including a better than expected report from Apple (AAPL). As expected, the Federal Reserve maintained its current interest rate stance, which it continues to view as appropriate in the current low-inflation environment.

ECONOMIC EVENTS: In the U.S., the advance goods trade deficit widened back out to $68.3B in December after narrowing to $63.0B in November. An index of pending home sales dropped 4.9% to 103.2 in December, missing estimates.

In central bank news, the Federal Reserve kept its benchmark interest rate range unchanged, with the Fed saying in its statement on the matter that the labor market remains strong with economic activity rising moderately. The Fed added that it believes the current stance of monetary policy is appropriate.

Outside the U.S., Bloomberg reported that the European Parliament has approved U.K. Prime Minister Boris Johnson's Brexit deal, clearing the path for Britain to leave the EU on January 31.

TOP NEWS: Shares of Apple (AAPL) gained 2.1% after the company last night reported results that topped expectations. BofA analyst Wamsi Mohan, who raised his price target on Apple to $350 following the report, said that the wider revenue range for the new quarter "de-risks" the impact of coronavirus in China and also points to strong gross margins for Apple.

Boeing (BA) shares were 1.7% higher despite the company's report of steep losses and lower than expected revenue in the fourth quarter. Boeing said it sees an estimated $4B of abnormal production costs for the 737 MAX and confirmed that the 787 production rate will be reduced from the current rate of 14 airplanes per month to 12 airplanes per month in late 2020.

McDonald's (MCD) reported better than expected fourth quarter sales and profits, including global comparable sales growth of 5.9% and U.S. comparable sales growth of 5.1%. Fellow restaurant giant Starbucks (SBUX) also reported a better than expected quarter, headlined by a global comparable store sales rise of 5% and Americas comparable store sales increase of 6% compared to the same period of last year.

General Electric (GE) reported better than expected results, prompting a 10.3% jump in its share price and an upgrade from Bank of America.

AT&T (T) sat out the rally in a number of other mega-cap reporters after its earnings beat consensus but its revenue missed the sell-side forecast. Expressing more confidence than the share selloff indicates, chairman and CEO Randall Stephenson said AT&T "delivered what we promised in 2019 and we begin this year with strong momentum in wireless, with HBO Max set to launch in May and our share retirement plan well underway."

Meanwhile, Lyft (LYFT) told Bloomberg and the New York Times in a statement that it is cutting roughly 90 employees, or 1.6% of its staff, but added that it intends to hire over 1,000 new employees in 2020.

MAJOR MOVERS: Among the noteworthy gainers was L Brands (LB), which jumped 12.9% after the Wall Street Journal reported that Les Wexner is in talks to step aside as CEO of the company, which is also exploring strategic alternatives for Victoria's Secret. Also higher were Macom (MTSI) and Progressive (PGR), which gained a respective 16.9% and 5.7% after reporting quarterly results.

Among the notable losers was Xilinx (XLNX), which slid 10.7% after it reported quarterly results and said it plans to reduce its global workforce by about 7%. Also lower after reporting quarterly results were AMD (AMD) and Hess (HES), which fell 6% and 6.9%, respectively.

INDEXES: The Dow rose 11.60, or 0.04%, to 28,734.45, the Nasdaq gained 5.48, or 0.059%, to 9,275.16, and the S&P 500 fell 2.84, or 0.087%, to 3,273.40.


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Disclosure: I may trade in the ticker symbols mentioned, both long or short. My articles represent my personal opinion and analysis and should not be taken as investment advice. Readers should do their own research before making decisions to buy or sell securities. Trading and investing include risks, including loss of principal.

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