FedEx outlook weighs on Wall Street ahead of Fed policy decision
(Reuters) - U.S. stocks fell on Wednesday after economic bellwether FedEx Corp’s downbeat profit outlook raised concerns about global growth, while investors waited for more clarity on the Federal Reserve’s interest rate forecasts for the rest of the year.
The central bank is expected to keep the fed funds rate steady and lower the number of hikes forecast for 2019 as it wraps up a two-day policy meeting, followed by a statement and a news conference.
The policy statement will also shed light on long-awaited details regarding the Fed’s plans to stop reducing its holdings of Treasury bonds.
“With the Fed, investors will be focusing on the growth outlook for 2019. The market is definitely laser-focused on the Fed for the next few hours,” said Eric Marshall, portfolio manager at Hodges Funds in Dallas.
“Investors are also digesting the FedEx numbers and trying understand how that translates into global growth and what their outlook could mean going forward.”
FedEx Corp dropped 4.4 percent after the package delivery company cut its 2019 profit forecast for the second time on slowing global trade growth.
FedEx dragged Dow Jones Transport down 1.47 percent and the index, which is closely monitored to gauge the health of the economy, was on pace for its biggest one-day percentage drop in almost two months.
Eight of the 11 major S&P sectors retreated, with healthcare stocks being the biggest drag.
At 11:07 a.m. ET the Dow Jones Industrial Average was down 60.27 points, or 0.23 percent, at 25,827.11. The S&P 500 was down 6.94 points, or 0.25 percent, at 2,825.63 and the Nasdaq Composite was down 6.47 points, or 0.08 percent, at 7,717.47.
Higher oil prices kept energy stocks afloat while gains in Facebook Inc and Alphabet Inc buoyed the communication services sector.
Expectations of a dovish stance from the Fed hit the rate-sensitive financial stocks, which fell 0.36 percent, while the bank sub-sector dipped 0.35 percent.
Optimism that the Fed will remain patient in raising borrowing costs and hopes that United States and China will resolve their trade spat helped U.S. stocks erase most of their losses from late last year.
The benchmark S&P 500 still remains 3.7 percent away from its record closing high in September.
Johnson & Johnson fell 0.9 percent after the U.S. FDA issued warning letters to a J&J unit and Sientra Inc for failing to comply with the post-approval study requirements for their breast implants.
J&J shares were among the biggest drags on the health sector as well as the blue-chip Dow.
General Mills Inc jumped 3.2 percent, the most on the S&P, after the Cheerios cereal maker raised its full-year forecast.
Declining issues outnumbered advancers for a 2.53-to-1 ratio on the NYSE and a 1.74-to-1 ratio on the Nasdaq.
The S&P index recorded eight new 52-week highs and no new low, while the Nasdaq recorded 25 new highs and 26 new lows.
Reporting by Medha Singh and Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta
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