Stock Market Today: Federal Reserve Speaks; Apple Hammers Earnings

It was a busy session in the stock market today, as investors digested a heavy load of earnings. There’s not much time for rest though, as plenty of other well-known stocks are set to report after the close on Wednesday.

Stock Market Today

On top of that, we heard from the Federal Reserve on Wednesday afternoon. The Fed will keep rates steady, sees an improving economic situation and wants to do little to rock the boat at the moment.

Basically Jerome Powell & Co. have little reason to raise or lower rates and prefer to keep the status quo. The group is keeping an eye on the coronavirus to see how it plays out and will maintain its role in the repo market through April.

Earnings Roundup

Apple (NASDAQ:AAPL) stepped up to the plate and it didn’t disappoint. Shares only rallied about 2%, despite the company hammering expectations.

Earnings of $4.99 per share beat expectations by 45 cents. Revenue of $91.8 billion grew 8.9% year-over-year and smashed expectations by $3.4 billion. On top of that, management expects second-quarter revenue of $63 billion to $67 billion, easily ahead of consensus estimates for $62.5 billion. The reason for the wide guide? The ongoing coronavirus is playing a role, as management keeps a close eye on the region.

Apple was among our top stock trades selections from Wednesday.

General Electric (NYSE:GE) stock was a big mover in the stock market today. Shares were higher by about 10% for most of the day on better-than-expected earnings and revenue results. Previously, management upped its industrial free cash flow (FCF) guidance to a range of break-even to $2 billion. For 2019, the total came in at $2.3 billion.

For 2020, management predicts industrial FCF of $2 billion to $4 billion, well ahead of analysts’ expectations for $1.2 billion. The one caveat? It’s dependent on Boeing’s (NYSE:BA) 737 Max returning to service, which management expects to occur around mid-year.

Speaking of Boeing, it too reported fourth-quarter earnings, and yikes, they were bad. A loss of $2.30 per share missed estimates by 50 cents, while revenue of $17.9 billion sank 36.8% year-over-year and missed expectations by a whopping $3.9 billion.

The quarter propelled BA to its first annual loss since 1997. Management said it expects the 737 Max to cost it more than $18.6 billion, but expects the jet to be back in service by mid-2020. Despite all this, shares climbed 1.7% on the day heading into the close.

Investors face Microsoft (NASDAQ:MSFT), Tesla (NASDAQ:TSLA), Facebook (NASDAQ:FB) and PayPal (NASDAQ:PYPL) after the close.

Movers in the Stock Market Today

Penn National Gaming (NASDAQ:PENN) soared more than 17% at one point, after locking down a 36% stake in Barstool Sports for $163 million. The deal consists of $135 million in cash and $28 million in convertible preferred stock. Barstool Sports has 66 million online visitors each month and Penn National hopes this partnership will help grow sports betting. Penn will be able to increase its stake to roughly 50% after three years, with an incremental investment of $62 million.

Ford’s (NYSE:F) Lincoln will work with Rivian to develop a new electric vehicle (EV). This move is part of an $11.5 billion investment from Ford into electrification. Rivian will provide its skateboard platform for Lincoln, as Ford pushes further into EVs following its Mustang Mach-E and F-Series pickup.

Many airlines are cutting flights to China with the coronavirus spreading rapidly.

American Airlines (NASDAQ:AAL), British Airways, Lufthansa, Cathay Pacific and United Airlines (NASDAQ:UAL) are among the several that are cancelling or suspending flights for certain dates. Cancellations are also happening from multiple Chinese airlines. There has been a significant decline in demand for many of these flights, and for obvious reasons.

Starbucks (NASDAQ:SBUX) is joining the plant-based food world by adding several new items on its menu this year (no surprise there). The U.S. and Canada will be getting a new breakfast sandwich with a plant-based patty.

Of course, SBUX wasn’t a big mover in the stock market today because of its menu options though. The company’s fiscal first-quarter earnings of 79 cents per share beat estimates by three cents, while revenue of $7.1 billion was a hair light of expectations. Global comparable-store sales also beat expectations, coming in at 5% against estimates for 4.4%.

However, the company opted not to provide full-year guidance, given the coronavirus outbreak. The company has temporarily closed more than 2,000 locations as a result, although China only represents about 10% of total revenue.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AAPL and SBUX.

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