Fed Rate Hike Decision Stalls Stock Market; Mulesoft Kicks Higher – Investor’s Business Daily

Stocks opened flat on Wednesday, as Facebook (FB) and American Airlines Group (AAL) weighed on the Nasdaq and with investors remaining cautious as a Federal Reserve rate hike, China trade measures and a congressional budget battle hung over the day’s trade.


The Nasdaq Composite and the S&P 500 each opened down 0.1%. The Dow Jones industrial average opened to a thing gain, but reversed to narrow losses within minuters of teh starting bell.

In a week that has grown increasingly complex, the first order of business for markets is the rate policy decision expected from the Federal Open Market Committee at 2 p.m. ET. This is the committee’s first meeting with Jerome Powell as chairman of the Federal Reserve, and Powell plans to hold his first press conference following the policy announcement.

Many federal offices are closed and eastern regional flights canceled due to a wintry storm bearing down on the Northeast. Investors are also keeping a careful eye on the White House’s plan to announce trade measures against China on Thursday.

In addition, federal lawmakers are once again stumbling toward a last-minute agreement on a $1.3 trillion spending package. A House vote is planned Thursday, followed by Senate approval Friday. The government has until midnight Friday to pass the bill in order to avoid another shutdown.

Other economic news includes February existing home sales data from the National Association of Realtors at 10 a.m. The weekly oil inventories report from the Energy Information Administration is scheduled for release at 10:30 a.m. ET, but could be rescheduled due to the storm.

Early Leaders: Mulesoft, Lam Research, Tenaris; Airlines Veer Lower

Trade on the Dow was tight, with advancers and decliners holding to moves well shy of 1%. Chevron (CVX) and General Electric (GE) vied for the early lead, up 0.4% each. UnitedHealth Group (UNH) dropped to the bottom fo the list, down 0.8%.

Mulesoft (MULE) spiked more than 5%, following a 27% gain on Tuesday, spurred by news that Salesforce.comCRM planned to acquire the enterprise software developer for $6.5 billion. Salesforce.com shares slipped 3.5% at the start of trade. The decline left Salesforce.com 10% above a flat base buy point of 109.29.

American Airlines fell 1.6% and United Continental Holdings (UAL) shed 0.8% as the number of flights canceled into New York’s JFK and LaGuardia airports, as well as other Northeast cities, rose to a reported 4,400. Delta Air Lines (DAL) and JetBlue (JBLU) each dropped more than 1%. Southwest Airlines (LUV) tumbled 4%.

Facebook dropped 2.1% in early trade, as fallout continued over the user data controversy sparked by Cambridge Analytica’s use of data during the 2016 U.S. presidential election. News reports Tuesday said the Federal Trade Commission had launched an investigation into whether Facebook’s data sharing had violated the terms of a previous consent decree. Facebook sahres were down 11% for the week, below critical levels of support and at their lowest mark since September.

Expedia opened down 0.3% after answering questions raised in reports on Tuesday that the company’s Orbitz subsidiary suffered a security breach involving 880,000 payment cards. The company said it had identified and fixed the problem, which affected a “legacy platform,” and that the current Orbitz.com site “was not in any way involved.”

Motorhome maker Winnebago (WGO) reversed its early gains and slipped 1% following its fiscal second-quarter results. A 9% per-share earnings gain was a penny short of analyst targets. Revenue increased 26%, well above expectations. The company said tax reforms should benefit earnings by between 10 cents and 12 cents a share this year, with further benefits expected in 2019.

Winnebago shares have been looking to retake support at their 10-week moving average, and start up the right side of a three-month consolidation.

The IBD Leaderboard line-up showed Tenaris (TS) up 1.2% in premarket trade. The stock has been trading just below a 36.44 buy point in a 14-month, cup-with-handle base.

Early action among China-based stocks was mixed. JD.com (JD) pared its early gain to 1.4% and looked to turn around a two-day decline. The stock has traded below its 10-week moving average since early March, working on a new base after a failed breakout attempt in January.

Premarket trade on the IBD 50 list showed Illumina perking up 2.5%. The maker of genetic screening and analysis equipment ended Tuesday in a buy range, just above a 249.07 buy point in a seven-week cup base.

IBD 50 peer Tal Education (TAL) slipped almost 2% early Wednesday, after gaining almost 6% Tuesday. Shares took a new high and ended almost 14% above a 36.26 buy point in a late-stage cup base.

Trade among chip stocks picked up approaching the open. Silicon MotionSIMO, Advanced Micro Devices and IBD 50 name Lam Research (LRCX) rose nearly 2% to lead the Philadelphia Semiconductor Index.

Advanced Micro Devices gained 1.6%, after a blog post from the company late Tuesday acknowledged security risks noted in recent news reports. But AMD said it does not expect the weakness to have an actual performance impact on its chips, and that the company would release patches in coming weeks.

AMD shares have been struggling through an eight-month downtrend.

Cereal maker General Mills (GIS) took one of the morning hardest hits, diving 9% after fiscal third-quarter results narrowly topped expectations, but full-year guidance came in below consensus views.


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