Wall Street retreats slightly ahead of Fed announcement
U.S. stocks pulled back from earlier gains Wednesday as investors exercised caution ahead of the Fed’s monetary policy decision this afternoon.
Approaching the lunch hour, the Dow Jones Industrial Average was down 18 points at 15,662, while the Nasdaq fell 4 points to 3,948 and the SP 500 lost 3 points to 1,769. Both the SP 500 and the Dow pulled back from record closing highs in the previous session.
The main event on the economic calendar today was the conclusion of the Federal Open Market Committee meeting, after which the Fed will announce its policy decision at 2pm ET. It is widely expected that the Fed will keep its $85 billion-a-month bond buying program in place, especially in light of recent weak economic data.
This morning, ADP reported that private sector employment gains slowed down in October, as employers added 130,000 jobs, compared to expectations of 138,000, according to Bloomberg. ADP also revised September’s gain to 145,000, down from 166,000 previously.
Meanwhile, inflation firmed slightly at the headline level in September while the core rate remained low. Consumer price inflation in September rose 0.2%, following a 0.1% rise the prior month. Less food and energy, CPI rose 0.1%, less than the 0.2% rise expected.
On the corporate front, Barclays (NYSE:BCS) shares were up 0.88% despite its adjusted pretax profit falling 26% on a drop in fixed income trading revenue and restructuring expenses, as earnings still topped estimates. The bank is also facing a bill of $700 million after last week losing an appeal in a five-year old lawsuit by the hedge fund Black Diamond Capital Management, according to reports in the FT. The bank was found liable of a breach of contract in a derivatives transaction, with a hearing yet to decide the exact amount it needs to pay up.
Elsewhere, LinkedIn (NYSE:LNKD) shares fell more than 6.2% after the company late Tuesday provided lower than expected fourth quarter sales guidance, despite its third quarter profit beating forecasts.
Also in tech, shares of Yelp Inc. (NYSE:YELP) slid 5% after the provider of online reviews late Tuesday reported a wider third-quarter loss and announced a new sale of stock.
General Motors (NYSE:GM) shares were up 3.6% Wednesday after the company’s adjusted third quarter profit topped estimates, with a multi-million dollar charge on a share buyback and taxes impacting the auto maker’s net profit.
In other news, after going through bankruptcy last year, Eastman Kodak Co (OTC:EKOD) said Tuesday it is returning to a listing on the New York Stock Exchange on Friday, with the ticker KODK.
European shares were mixed at the time of writing, taking cues from the U.S., while Asian markets all closed in the black ahead of the Fed decision. In Spain, as flagged by the country’s central bank last week, the country exited recession after over two years in the third quarter, with GDP rising 0.1% on quarter.
In commodities, gold futures were up $9 to $1,354 an ounce after the ADP jobs data, while December crude shed 89 cents to $97.28 a barrel as U.S. crude-oil stocks rose 4.1 million barrels, according to the EIA report.