Stocks began the day little changed and moved higher heading into the Fed's interest rate announcement. Expectations were for a quarter point hike in rates and an accompanying signal that the number of interest rate hikes in 2019 would be reduced. The Fed came through on both fronts, but also reduced its growth forecast for 2019 to 2.3% from 2.5%. Investors reacted by initially selling stocks, then buying, and then selling off as Fed Chair Jerome Powell held a news conference to discuss the decision and the central bank's view on the economy. The losses increased in the final hour, pushing the market deeper into a hole for the month of December.
ECONOMIC EVENTS: In the U.S., the current account gap widened to to $124.8B in Q3, which was close to forecast. Existing home sales rose 1.9% to a 5.32M pace in November, beating forecasts. In Federal Reserve news, the Fed increased the benchmark interest rate by 25 basis points, saying it expects "some further gradual increases" to interest rates. In addition, Fed members lowered their view on the end 2019 funds rate to 2.9% from 2.1%, implying a reduced expectation for only two rate hikes next year.
COMPANY NEWS: GlaxoSmithKline (GSK) shares rose about 1% after it and Pfizer (PFE) announced that they have entered into an agreement to merge their consumer healthcare units into a joint venture, creating a single consumer healthcare company. Under the terms of the agreement, Pfizer will receive a 32% equity stake in the JV, entitling Pfizer to its pro rata share of the JV's earnings and dividends.
In earnings news, shares of FedEx (FDX) dropped 12% after the company reported better than expected quarterly results but cut its guidance for fiscal 2019, citing European weakness. In addition, FedEx announced cost reduction actions that include a "voluntary buyout program for eligible employees, international network capacity reductions at FedEx Express, limited hiring in staff functions, and reductions in discretionary spending."
Washington D.C. Attorney General Karl Racine is suing Facebook (FB) for "failing to protect its users' data, enabling abuses like one that exposed nearly half of all District residents' data to manipulation for political purposes during the 2016 election." Facebook shares fell 7% after the news and an earlier report that the social media giant allowed tech companies, including Spotify (SPOT) and Netflix (NFLX), far greater access to user data than it had previously disclosed.
Meanwhile, Johnson & Johnson (JNJ) shares were 2% lower after the New York Times reported that the company was denied a bid to overturn a jury verdict that awarded $4.69B to 22 women who blamed their ovarian cancer on asbestos in the company's baby powder and talc products.
Additionally, the Wall Street Journal reported that Altria Group (MO) is close to a deal to acquire a 35% stake in e-cigarette startup Juul Labs at a roughly $38B valuation.
MAJOR MOVERS: Among the noteworthy gainers was General Electric (GE), which rose 5% after reports that the company has filed confidentially for an initial public offering of its healthcare unit. Also higher after reporting quarterly results were General Mills (GIS) and Jabil (JBL), which gained a respective 5% and 7% after reporting quarterly results.
Among the notable losers was FTS International (FTSI), which slid 14% after Credit Suisse analyst James Wicklund downgraded the stock to Neutral from Outperform. Also lower was Micron (MU), which fell 8% after reporting quarterly results.
INDEXES: The Dow fell 351.98, or 1.49%, to 23,323.66, the Nasdaq lost 147.08, or 2.17%, to 6,636.83
, and the S&P 500 declined 39.20, or 1.54%, to 2,506.96.