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Stock market news live updates: Stocks fall as traders await Fed decision, Boeing slides after quarterly results

Emily McCormick
·Reporter
·6 min read

Stocks dipped Wednesday as investors awaited another batch of corporate earnings results and the Federal Open Market Committee’s (FOMC) January monetary policy decision.

The S&P 500 traded lower by about 1.5%, pulling back from the index’s all-time high. The Dow also sank by more than 1%, as shares of Boeing (BA) dropped after posting a record annual loss and booking additional charges over its delayed 777X aircraft roll-out.

The Nasdaq dipped even as some heavily weighted tech stocks pushed higher. Shares of Microsoft (MSFT) jumped after the company posted fiscal second quarter results that handily topped expectations late Tuesday, driven by accelerating growth in its key cloud and personal computing businesses. But other quarterly results failed to impress Wall Street: Shares of Starbucks (SBUX) fell after the company’s quarterly comparable same-store sales growth declined more than expected due to lingering impacts of the pandemic.

Elsewhere, shares of GameStop (GME) more than doubled after closing higher by 93% a day earlier earlier. The stock’s market capitalization sailed to more than $10 billion as a multitude of traders on one of Reddit’s popular stock forums banded together to clash with Wall Street short-sellers yet again. Shares of other heavily shorted stocks including Express (EXPR) and Bed Bath & Beyond (BBBY) also soared. AMC (AMC) shares surged as much as 310% on Wednesday to hit the highest level since 2018 and erase the stock’s pandemic-era losses.

Individual stocks aside, the major equity indexes came under pressure as investors awaited more updates on fiscal stimulus out of Washington and the FOMC’s latest monetary policy statement. The FOMC will release its statement at 2 p.m. ET on Wednesday, with Federal Reserve Chair Jerome Powell set to deliver a press conference shortly thereafter.

Many economists are expecting this month’s FOMC meeting to be yet another buffer meeting eliciting virtually no policy changes, as officials wait to ascertain the strength of the economic recovery once the COVID-19 vaccine is widely distributed and the pandemic comes under control. Powell himself said during public remarks earlier this month that he currently sees the U.S. economy as “far from our goals,” and added that the Fed was looking to “be careful not to exit too early.”

“I think the key message coming out of tomorrow: It’s far too early to talk about normalization from the Fed’s perspective, really premature to talk about tapering, and Chair Powell should send a dovish message,” Matthew Luzzetti, Deutsche Bank chief U.S. economist, told Yahoo Finance on Tuesday.

On the earnings front, companies including Facebook (FB), Apple (AAPL) and Tesla (TSLA) are set to report quarterly results on Wednesday.

—

12:40 p.m. ET: Stocks hold lower ahead of Fed decision

Here’s where markets were trading as of 12:40 p.m. ET:

  • S&P 500 (^GSPC): -61.09 (-1.59%) to 3,788.53

  • Dow (^DJI): -335.82 (-1.15%) to 30,581.22

  • Nasdaq (^IXIC): -164.91 (-1.21%) to 13,462.02

  • Crude (CL=F): +$0.49 (+0.93%) to $53.10 a barrel

  • Gold (GC=F): -$7.50 (-0.41%) to $1,843.40 per ounce

  • 10-year Treasury (^TNX): -2.9 bps to yield 1.011%

—

10:07 a.m. ET: Boeing shares weigh on Dow after aircraft-maker reports a record annual loss

Boeing (BA) posted fourth-quarter results that reflected ongoing negative impacts from the coronavirus pandemic and 737 Max groundings.

The company’s core loss per share came out to $15.25, or much wider than the $2.33 loss per share reported in the same quarter last year. Revenue of $15.3 billion sank 15% over last year. Boeing’s net losses in the fourth quarter were $8.4 billion, bringing the company’s full-year net loss to a record $11.9 billion.

During an interview with CNBC Wednesday morning, CEO David Calhoun said he believed a “robust” recovery in travel demand would take place beginning in the mid- to late-summer period this year.

Boeing also reported Wednesday that its twin-aisle 777X aircraft would not begin being delivered until late 2023, or three years later than originally scheduled. The delay generated a $6.5 billion pre-tax charge to Boeing, as low initial production rates weighed on the launch.

—

9:30 a.m. ET: Stocks open lower, Dow drops 300+ points, or 1%

Here’s where markets were trading shortly after the opening bell:

  • S&P 500 (^GSPC): -43.25 (-1.12%) to 3,806.37

  • Dow (^DJI): -335.18 (-1.08%) to 30,601.86

  • Nasdaq (^IXIC): -178.10 (-1.31%) to 13,447.96

  • Crude (CL=F): -$0.12 (-0.23%) to $52.49 a barrel

  • Gold (GC=F): -$12.20 (-0.66%) to $1,838.70 per ounce

  • 10-year Treasury (^TNX): -3.2 bps to yield 1.008%

—

8:30 a.m. ET: Durable goods orders increased far less than expected in December

Orders for U.S. manufactured goods intended to last three years or longer slowed more than expected in December, as slumping transportation goods orders weighed on results.

Durable goods orders rose just 0.2% in December over November, the Commerce Department said Wednesday, following an upwardly revised increase of 1.2% in November. Consensus economists were looking for durable goods orders to rise by 1.0%. Still, orders rose for an eighth straight month.

Excluding transportation orders, however, durable goods orders were up 0.7% to outpace estimates for a rise of 0.5%. New orders for non-defense aircraft and parts slumped more than 50% in December over November.

Non-defense capital goods orders, excluding aircraft, increased by a better than expected 0.6%, following an upwardly revised 1.0% rise in November. This metric is closely watched as a proxy for business capital expenditures, and has risen for eight consecutive months.

—

7:20 a.m. ET Wednesday: Stock futures point to a lower open

Here were the main moves in markets, as of 7:20 a.m. ET Wednesday:

  • S&P 500 futures (ES=F): 3,810.5, down 32 points or 0.83%

  • Dow futures (YM=F): 30,609.00, down 233 points or 0.76%

  • Nasdaq futures (NQ=F): 13,462.25, down 23.25 points or 0.17%

  • Crude (CL=F): +$0.01 (+0.02%) to $52.62 a barrel

  • Gold (GC=F): -$15.00 (-0.81%) to $1,835.90 per ounce

  • 10-year Treasury (^TNX): -1.4 bps to yield 1.026%

—

6:02 p.m. ET Tuesday: Stock futures open higher

Here were the main moves in markets, as of 6:02 p.m. ET Tuesday:

  • S&P 500 futures (ES=F): 3,849.5, up 7 points or 0.18%

  • Dow futures (YM=F): 30,870.00, up 28 points or 0.09%

  • Nasdaq futures (NQ=F): 13,566.25, up 80.75 points or 0.6%

A trader stands outside the New York Stock Exchange in the financial district during the coronavirus disease (COVID-19) pandemic in the Manhattan borough of New York City, New York, U.S., September 9, 2020. Picture taken September 9, 2020. REUTERS/Carlo Allegri
A trader stands outside the New York Stock Exchange in the financial district during the coronavirus disease (COVID-19) pandemic in the Manhattan borough of New York City, New York, U.S., September 9, 2020. Picture taken September 9, 2020. REUTERS/Carlo Allegri

—

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Jenkins outlined a series of points leading to a midstream recovery in 2021, which include the shift from ‘lockdown’ to ‘reopen’ policies; a general boost on the way for commodities, as the economy picks up; a political point, that some of DC’s more traditional centrists are unlikely to vote in favor of anti-oil, Green New Deal policies; and finally, with stock values relatively low, the dividend yields are high. A look into the TipRanks database reveals two midstream companies that have come to Raymond James’ attention – for all of the points noted above. These are stocks with a specific set of clear attributes: a dividend yield of 7% or higher and Buy ratings. MPLX LP (MPLX) MPLX, which spun off of Marathon Petroleum eight years ago as a separate midstream entity, acquires, owns, and operates a series of midstream assets, including pipelines, terminals, refineries, and river shipping. MPLX’s main areas of operations are in the northern Rocky Mountains, and in the Midwest and stretching south to the Gulf of Mexico coast. Revenue reports through the ‘corona year’ of 2020 show the value potential of oil and gas midstreaming. The company reported $2.18 billion at the top line in Q1, $1.99 billion in Q2, and $2.16 billion in Q3; earnings turned negative in Q1, but were positive in both subsequent quarters. The Q3 report also showed $1.2 billion in net cash generated, more than enough to cover the company’s dividend distribution. MPLX pays out 68.75 cents per common share quarterly, or $2.75 annualized, which gives the dividend a high yield of 11.9%. The company has a diversified set of midstream operations, and strong cash generation, factors leading Raymond James' Justin Jenkins to upgrade his stance on MPLX from Neutral to Outperform (i.e. Buy). His price target, at $28, implies a 22% one-year upside for the shares. (To watch Jenkins’ track record, click here) Backing his stance, Jenkins writes, “Given the number of 'boxes' that the story for MPLX can check, it's no surprise that it's been a debate stock. With exposure to inflecting G&P trends, an expected refining/refined product volume recovery, the story hits many operational boxes - while also straddling several financial debates… We also think solid 2020 financial results should give longer-term confidence…” Turning now to the rest of the Street, it appears that other analysts are generally on the same page. With 6 Buys and 2 Holds assigned in the last three months, the consensus rating comes in as a Strong Buy. In addition, the $26.71 average price target puts the upside at ~17%. (See MPLX stock analysis on TipRanks) DCP Midstream Partners (DCP) Based in Denver, Colorado, the next stock is one of the country’s largest natural gas midstream operators. DCP controls a network of gas pipelines, hubs, storage facilities, and plants stretching between the Rocky Mountain, Midcontinent, and Permian Basin production areas and the Gulf Coast of Texas and Louisiana. The company also operates in the Antrim gas region of Michigan. In the most recent reported quarter – 3Q20 – DCP gathered and processed 4.5 billion cubic feet of gas per day, along with 375 thousand barrels of natural gas liquids. The company also reported $268 million in net cash generated, of which $130 million was free cash flow. The company reduced its debt load by $156 million in the quarter, and showed a 17% reduction in operating costs year-over-year. All of this allowed DCP to maintain its dividend at 39 cents per share. Early in the corona crisis, the company had to cut back that payment – but only once. The recently declared 4Q20 dividend is the fourth in a row at 39 cents per common share. The annualized rate of $1.56 gives a respectable yield of 7.8%. This is another stock that gets an upgrade from Raymond James. Analyst James Weston bumps this stock up from Neutral to Outperform (i.e. Buy), while setting a $24 target price to imply 20% growth on the one-year time horizon. “[We] expect DCP to post yet another solid quarter on sequential improvements in NGL prices, NGL market volatility, and positive upstream trends… we are not capitalizing current propane prices and anticipate a solid, but more normalized pricing regime over the next 12-18 months. In our view, this will create a beneficial operating environment for DCP cash flows that is not currently reflected in Street estimates,” Weston noted. All in all, the Moderate Buy analyst consensus rating on DCP is based on 7 recent reviews, breaking down 4 to 3 Buy versus Hold. Shares are priced at $19.58 and the average target of $23 suggests an upside of ~15% from that level. (See DCP stock analysis on TipRanks) To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

  • AT&T takes $15.5 billion charge on DirecTV, adds more phone customers

    AT&T Inc said on Wednesday it wrote down its premium TV business, which includes satellite television unit DirecTV, by $15.5 billion, reflecting the impact of years of cord-cutting in the industry as viewers move to cheaper online streaming services. The fourth-quarter writedown comes as sources have told Reuters AT&T has entered into exclusive talks to sell a minority stake in DirecTV to private equity firm TPG in a deal seen valuing the division at above $15 billion. AT&T purchased DirecTV for $68 billion including debt in 2015.