U.S. equity markets opened lower on Wednesday as the Dow was pummeled by two of its heavyweights: Apple and Boeing in the wake of disappointing earnings results.
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Here are six things to watch throughout the trading day.
The tech titan didn’t give investors much to cheer about in its fiscal first-quarter earnings report on Tuesday night as iPhone sales came in lower than expected, the slowest-ever growth in shipments, alongside a weak fiscal 2Q outlook. Still, Apple (AAPL) reported record profit and revenue during the quarter, which came in at $18.36 billion, and $75.87 billion, respectively.
Investors focused on sales in China heading into the March quarter after the company’s CEO Tim Cook said more softness is becoming apparent in the region.
“We are starting to see something that we have not seen before,” he said on the earnings call.
For its fiscal second quarter, Apple forecast $50 billion to $53 billion in revenue, which came in below already lowered expectations for $55.6 billion.
The aerospace giant on Wednesday issued lower-than-expected 2016 earnings, and said it expects to deliver fewer commercial planes this year.
For the quarter, Boeing’s (BA) net income fell to $1.51 a share from $2.02 during the same period the year prior, while revenue dropped about 4% to $23.57 billion. The company added that it expects core earnings between $8.15 and $8.35 a share, excluding pension costs and other expenses, while Wall Street had been anticipating $9.43 a share.
Late Tuesday night, the shipping company announced the authorization of a more than $3 billion share buyback program for about 25 million shares.
Investors cheered the decision, sending the stock price higher in pre-market trading. FedEx (FDX) didn’t offer a time limit for the program, though the company’s previous repurchase program, launched in 2014 for 15 million shares, has been completed. Since that time, FedEx said it has returned nearly $8 billion to shareholders.
4. Royal Dutch Shell
Shell announced its shareholders approved its $49 billion proposed takeover of the UK’s BG Group, with 83% voting in favor of the deal. BG’s shareholders will vote on the deal on Thursday. If approved it would clear a set of hurdles paving the way for the creation of the world’s biggest liquefied natural gas trader.
"Our immediate focus is on the successful completion of the transaction and we now await the results of tomorrow’s BG shareholder vote," Shell’s Chief Executive Ben van Beurden said in a statement.
If the deal is approved by both sets of shareholders, the two companies will combine on February 15.
5. Oil Inventories
Global oil prices came off the lows of the session after the latest inventory data from
The Energy Information Administration reported U.S. crude oil stockpiles rose more than expected last week, recording the highest level on record. The data showed inventories rose 8.38 million barrels to 494.92 million, more than the 3.3 million barrel build forecast.
Weekly distillate stocks were off by 4.06 million barrels to 160.47 million, compared to a forecast for a smaller draw of 1.94 million barrels. Meanwhile, gasoline stockpiles rose by 8.38 million barrels, more than the expected 1.5 million barrel build.
Demand for both distillate and gasoline has decreased over the last four weeks from the same period a year ago.
The Federal Open Market Committee wraps up its two-day policy-setting meeting on Wednesday. At the conclusion of the meeting, it will release a statement outlining its economic projections. Traders around the world will closely eye the statement for any indication of an update on the central bank’s plans for future rate increases, especially after market turmoil that forced Wall Street into its worst start to a new year ever.
The Fed, in December, opted to hike short-term interest rates 0.25%, the first rise in nearly a decade, as it sees the U.S. economy as having found more stable footing after the worst financial crisis since the Great Depression. At the conclusion of that meeting, policymakers forecast another three to four rate hikes before the end of 2016. But skeptics argue with volatility gripping global markets, it would be a mistake to continue raising rates in the U.S. while other global central banks are focused on easing monetary policy.
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