Stock market pauses, Fed chair says current policy seems right - Detroit Free Press

Benzinga Special to the Free Press

Published 6:30 AM EST Nov 16, 2019

The stock market’s November rally took a breather last week, with the S&P 500 trading mostly flat as trade talks between the U.S. and China appeared to once again stall.

The latest hitch appears to be that Chinese officials are reluctant to agree to a definitive commitment to U.S. agricultural purchases.

Developments of the week

On Wednesday, Disney shares gained more than 7% after the company reported its new Disney+ streaming service gained more than 10 million subscribers following its Tuesday launch. Disney said the surge of sign-ups was so large that Disney+ briefly experienced technical difficulties dealing with the initial demand.

Also on Wednesday, Federal Reserve Chair Jerome Powell told Congress the Fed’s current monetary policy is “likely to remain appropriate” as long as the U.S. economy continues along its current growth trajectory. The Federal Reserve has already cut its benchmark interest rate three times in 2019 to a target range of between 1.5% and 1.75%.

President Donald Trump once again blasted the Fed in a speech in front of the Economic Club of New York. Trump has repeatedly demanded more aggressive interest rate cuts from the Fed, and said stock market returns in recent years could have been 25% larger “if we had a Federal Reserve that worked with us.”

Chinese e-commerce giant Alibaba reported a record $38.3 billion in gross merchandise value sold during its Singles Day sale on Monday, the world’s largest 24-hour shopping event.

Mixed earnings continue

Cisco shares tumbled more than 8% after the company’s fiscal second-quarter guidance fell short of analyst expectations. Cisco said sales next quarter will likely drop 3-5%, well short of the 2.6% growth Wall Street had expected.

Walmart reported a third-quarter earnings beat and slight revenue miss, but raised its full-year earnings guidance. Walmart’s online sales were up 41% in the third quarter. “You know they’re going to have massive revenues,” Kevin Hincks, senior specialist in the Trader Group at TD Ameritrade said. “But the variable was e-commerce growth. That number was a nice surprise.”

This week, earnings season continues with reports from major retailers, including Home Depot and TJX on Tuesday and Lowe’s and Target on Wednesday.

“What we’ve been paying attention to is: What’s the relationship between Lowe’s and Home Depot? Is Lowe’s closing the gap, or is Home Depot still the clear leader?” Hincks said. “Marvin Ellison taking over at Lowe’s, he’s a Home Depot alumni. So you know he’s bringing some of that Home Depot game plan to Lowe’s.”

With more than 90% of S&P 500 companies already reporting, 75% have reported earnings beats in the third quarter, according to FactSet.

Economic numbers

This week, investors will get more economic insight from the Federal Open Market Committee October meeting minutes, due to be released Wednesday. The People’s Bank of China is also scheduled to announce its latest interest rate decision on Wednesday.

Weekly business quiz

This beauty business found its beginnings in France, but has since expanded to have a global presence.

It was the first cosmetic retailer that allowed customers to try before purchasing, revolutionizing the way makeup was sold. It now has more than 17,000 products in its offerings.

When it started, its sole focus was in perfumes, selling under the name Shop 8. Shortly after this flagship store, it proceeded to open up 12 more locations.

Following its sale to Mandonnaud, the company was expanded by another 38 stores and soon launched its first bath and body products. In later years, it would be sold again to its current parent company. As the year 2000 approached, it began its international expansion with new locations in Portugal, Poland, Spain, Italy and the United States.

At the same time, it saw many revisions to its slogan. First, it was revamped as “Beauty is a language.” Two years later, the line was determined to be “Go forth in beauty.”

Following its own slogan, this company continued to grow its brick-and-mortar locations with new openings in Asia, Brazil and Mexico. It also launched its online market due to e-commerce’s rise in popularity.

Since day one, it has sought ways to change the beauty industry, and this mindset remains ingrained in its operations. More recently, it partnered with Pantone to create a shade selector that allowed personalization of a product to a customer’s skin tone and style.

Answer: Sephora

Benzinga is a financial news a data company headquartered in Detroit.

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https://www.freep.com/story/money/business/2019/11/16/stock-market-fed-interest-rates/4202572002/

2019-11-16 11:30:00Z
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