Stocks bounced around the unchanged line on Wednesday after the Federal Reserve delivered a 0.25% rate hike, as expected. That takes the short-term policy rate to upwards of 1.75%, up from a low of 0% as recently as 2015. The big news was that new Fed chairman Jerome Powell sounded a hawkish note, and policymakers increased their estimate of 2019 and long-run interest rates by another 0.25%.
This was widely seen as a hawkish result and the post-announcement trading action was volatile. We can expect some of yesterday’s storm to continue today as President Trump is expected to unveil his tariff package against China. The S&P 500 rallied to a high of 0.8% and a low of 0.3% within 45 minutes.
Only three of 11 sector groups finished in the green with energy leading the way on strength in crude oil, which hit its best level in nearly seven weeks on an inventory drawdown. Consumer staples were the laggards down 1.3%. The result was a 52-week low at a time when the broad market is holding up pretty well.
According to SentimenTrader, over the past 90 years that has only happened in 1993 and 1999. So, caution is warranted as the situation is unusual, to say the least. On a technical basis, large-caps have failed to reverse the breakdown from the multi-month wedge pattern. That’s a very bearish sign. And it suggests further price weakness ahead.
Here are three tickers to watch:
General Mills, Inc. (NYSE:GIS) lost 8.9% after lowering its profit guidance. Earnings of 79-cents-per-share beat estimates by a penny on a 2.3% rise in revenues. But the contraction in profitability was a negative spot. Something that management wants to address by raising prices on consumers soon.
Facebook Inc (NASDAQ:FB) actually gained 0.7% as CEO Mark Zuckerberg finally came out of hiding to address the Cambridge Analytica scandal and the probable regulatory and consumer blowback from the selling and lax protection of user data. In an interview with CNN Wednesday night, Zuckerberg opened the door to testifying before Congress and suggested he was supportive of the idea of increased regulation.
Apple Inc. (NASDAQ:AAPL) has fallen back below its 50-day moving average, a major sign of technical support that it has struggled to stay above since December. Investors are focusing on reports the company is vertically integrating with its own micro-LED displays. Demand continues to be tepid for the $1,000 iPhone X and this year’s models look to be incremental, at best.
Check out Serge Berger’s Trade of the Day for March 22.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
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