Stocks finished the session a tad lower for a second straight day amid mixed quarterly results from Wall Street, as the Fed kicked off its two-day policy meeting.
First, the scoreboard:
- Dow: 17,576.74, -46.31, (-0.26%)
- S&P 500: 2,064.73, -6.45, (-0.31%)
- Nasdaq: 5,027.26, -7.44, (-0.15%)
And now, the top stories on Tuesday:
- Walgreens might announce it is buying Rite Aid tomorrow. The Wall Street Journal reported that the two pharmacy chains were in talks for a deal that would value Rite Aid at nearly $US10 billion (its current market cap is $US6 billion). The combined company would be valued at $US116 billion. Rite Aid shares soared by as much as 40%, while Walgreen rose by about 4%. Walgreens reports earnings before the opening bell tomorrow.
- Ferrari shares dropped below their IPO price, and some early investors lost money. The stock fell by 7% to as low as $US49.36. The stock had priced at $US52 per share — the higher end of expectations — and opened at $US60 at its public debut last Wednesday.
- Alibaba shares rose by as much as 6% after earnings. The Chinese e-commerce giant reported better-than-expected sales of 22.2 billion yuan ($US3.5 billion) for its fiscal second quarter, and net income of 22.7 billion yuan ($US3.6 billion). Gross merchandise volume (GMV, the total value of transactions across Alibaba) rose 28% year-on-year. The company said its China retail marketplace was thriving, as mobile made up 62% of all GMV in the country. The stock has rallied about 23% since Barron’s magazine wrote last month that it would fall 50%.
- Crude oil moved lower and closer to $US40 per barrel. West Texas Intermediate crude oil futures in New York fell by more than 2% to as low as $US42.60 per barrel. The recent industry news was that the US plans to sell millions of barrels of its Strategic Petroleum Reserves between 2018 and 2025, as part of the budget deal reached last night between Congress and the White House.
- In economic data, durable goods orders fell 1.2% month-on-month, while core orders (excluding military and transportation orders) fell 0.4%. Core capital goods orders fell to a six-year low of 7.9% compared to the prior year.
- Consumer confidence slipped in October, according to the Conference Board. The headline index was 97.6; economists had estimated it was unchanged from September at 103. “Consumers were less positive in their assessment of present-day conditions, in particular the job market, and were moderately less optimistic about the short-term outlook,” said the Conference Board’s Lynn Franco in the report. Some economists noted that this was a delayed response to the recent drop in the stock market.
- The services sector also slowed a bit. The flash purchasing manager’s index on the US services sector was 54.4 in October (55.1 prior), according to Markit Economics. “The warning lights are also flashing brighter in relation to the outlook,” said Markit’s Chris Williamson. “Business optimism slipped to one of the lowest seen since the global financial crisis, and employment growth fell markedly in October.”