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US stocks fall ahead of Fed decision on interest rates

Posted on Wednesday, September 18th, 2019 By Damian J. Troise And Alex Veiga, AP Business Writer

Stocks moved broadly lower on Wall Street in afternoon trading Wednesday ahead of a highly anticipated decision from the Federal Reserve on interest rates.

The Fed is expected to cut its benchmark interest for a second time this year. Close attention will be paid to any clues Fed Chairman Jerome Powell gives about future rate policy during a 2:30 p.m. press conference.

Technology, industrial and energy stocks were among the biggest losers as investors headed cautiously for less risky holdings.

Adobe fell 2.9%, one of the tech sector's biggest decliners, after giving investors a weak profit forecast. FedEx led the slide in industrial stocks after issuing a disappointing earnings report.

Financial stocks, including Bank of America and Morgan Stanley, fell as bond yields declined. For banks, lower bond yields mean less lucrative interest rates on loans.

Bond prices rose and the yield on the 10-year Treasury fell to 1.75% from 1.81% late Tuesday. Investors typically shift money into bonds when they grow more concerned about the economy's health.

Utilities held up the best with slight gains. The sector is typically considered a safer place to park money amid concerns about economic growth.

Investors largely expect the Fed to cut short-term interest rates by another quarter of a percentage point, following a similar cut in late July. That marked the first time in more than a decade that the central bank cut rates as it tries to shield the United States from the pain of a slowing global economy and the effects of the trade war with China.

U.S. and Chinese representatives plan to hold trade talks next month in Washington.

Aside from the rate cut, investors will also be listening for the Fed's assessment of the nation's economic health any other cues from Powell about the central bank's future intentions. Back in July, the Dow Jones Industrial Average dropped more than 300 points when Powell refused to commit to a long cycle of rate cuts.

KEEPING SCORE: The S&P 500 index fell 0.4% as of 1:15 p.m. Eastern time. The Dow fell 68 points, or 0.3%, to 27,042. The Nasdaq fell 0.6%. The Russell 2000 index of smaller company stocks was down 1%.

Major stock indexes in Europe edged motsly higher. Asian stocks were mixed.

MIDWEEK STUMBLE: The broader market wobbled throughout the week and is so far on track for a slight loss after three consecutive weeks of gains. Those gains came as both sides in the U.S.-China trade war took steps to ease tensions ahead of planned negotiations in October.

But, the volatility has been taking its toll. The S&P 500 is eking modest gains of 1.9% for the quarter with just a few weeks left. That marks a pullback from gains of 3.8% in the second quarter and a serious crimping of growth compared with a 13.1% rise during the first quarter.

OIL SLICK: Oil prices continued pulling back from a 14% spike on Monday as Saudi Arabia brings back production at an oil facility attacked over the weekend. It said half of the production cut by the attack is already restored and plans on full production by the end of the month. Benchmark U.S. crude fell $1.04 to $58.30 per barrel. Brent crude, the international standard, fell 96 cents to $63.59.

MISSED DELIVERY: FedEx fell 13.6% after reporting a disappointing drop in fiscal first quarter profit and cutting its full-year forecast as the trade war takes its toll on economic growth. The company is also dealing with the loss of its lucrative contract with Amazon. FedEx cut ties with the retail giant over the last several months.

CEO Fred Smith said escalating tariffs and trade tension between the U.S. and China have lowered industrial production and hurt the international shipment of goods.

TOUGH TO CHEW: Chewy fell 5.9% to $28.31 after the online pet store's fiscal second quarter loss was far wider than Wall Street had expected. The company debuted on the New York Stock Exchange in June at $22 per share and closed at $34.99 on its first day.

Companies Mentioned in This Article

CompanyCurrent
Price
Price
Change
Dividend
Yield
P/E
Ratio
Consensus
Rating
Consensus
Price Target
Adobe (ADBE)$272.70-2.4%N/A49.14Buy$302.77
Morgan Stanley (MS)$42.79+0.6%3.27%9.28Buy$55.50
FedEx (FDX)$150.77+0.5%1.72%9.71Hold$172.08

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