Stocks began the session with modest losses and saw their lows a short time after the open. The optimism surrounding trade talks with China may have cooled a bit, but investor's attention turned to the testimony by Fed Chairman Jerome Powell to the Senate Banking Committee. The Chairman's testimony included prepared remarks that said although the economy remains strong, recent data has been conflicting. That was evident today, as the housing data was below expectations, but the consumer confidence reading was well ahead of analysts' forecast.
ECONOMIC EVENTS: In the U.S., housing starts dropped 11.2% to a 1.078M rate in December, missing expectations. The FHFA home price index edged up 0.3% to 270.2 in December. The Case Shiller 20-city home price index fell 0.23% to 212.96 in December. The Conference Board Consumer Confidence Index jumped to 131.4 from a 16-month low of 121.7 in January.
Fed Chairman Jerome Powell, in his semi-annual monetary policy report to Congress, stated, "While we view current economic conditions as healthy and the economic outlook as favorable, over the past few months we have seen some crosscurrents and conflicting signals. Financial markets became more volatile toward year-end, and financial conditions are now less supportive of growth than they were earlier last year. Growth has slowed in some major foreign economies, particularly China and Europe. And uncertainty is elevated around several unresolved government policy issues, including Brexit and ongoing trade negotiations.
TOP NEWS: Dow member Home Depot (HD) is down 2% near noon after the home improvement giant reported lower than expected fourth quarter profits and gave a lower than expected earnings outlook for the new year. However, Home Depot also announced a $15B share repurchase program and raised its dividend 32%, calling the capital return commitment "a demonstration of confidence in the business going forward."
Shares of Tesla (TSLA) are fractionally higher despite the Securities Exchange Commission reportedly having asked a judge to hold CEO Elon Musk in contempt for violating an agreement requiring him to seek pre-approval from the company for social media posts and other written communication that would be material to Tesla or its investors. The agency claims the executive breached the deal with a February 19 tweet about car production. Following the SEC's request, Musk responded via Twitter that the "SEC forgot to read Tesla earnings transcript, which clearly states 350k to 500k. How embarrassing ..." Subsequently, U.S. District Judge Alison Nathan ordered Musk to explain by March 11 why he should not be held in contempt in his case against the SEC.
Shares of Caterpillar (CAT) dropped 2% in morning trading after the heavy equipment maker was downgraded to Sell at UBS, which predicted that the majority of the company's end markets will peak this year, and that revenue and margins will come under pressure in 2020 as demand declines.
The U.S. Court of Appeals in Washington D.C. upheld a lower court ruling in support of AT&T's (T) Time Warner acquisition, concluding that "the government's objections that the district court misunderstood and misapplied economic principles and clearly erred in rejecting the quantitative model are unpersuasive."
MAJOR MOVERS: Among the noteworthy gainers was Ferroglobe (GSM), which jumped 27% after reporting quarterly results and after announcing that CFO Phillip Murnane has taken a temporary medical leave of absence. Also higher after reporting quarterly results were Tenet (THC) and Etsy (ETSY), which gained a respective 12% and 15%.
Among the notable losers was SunOpta (STKL), which declined 41% after reporting quarterly results, announcing the termination of David Colo as president and CEO, and providing an update on its Value Creation Plan. Also lower after reporting quarterly results were Discovery (DISCA) and TransEnterix (TRXC), which fell 7% and 12.5%, respectively.
INDEXES: Near midday, thee Dow was down 28.78, or 0.11%, to 26,063.17 , the Nasdaq was down 14.40, or 0.19%, to 7,540.06 , and the S&P 500 was down 2.14, or 0.08%, to 2,793.97 .
Home Depot
-3.45 (-1.82%)
Tesla
+2.65 (+0.89%)
Caterpillar
-3.19 (-2.26%)
AT&T
+0.21 (+0.67%)
Ferroglobe
+0.58 (+26.36%)
Tenet Healthcare
+2.94 (+12.15%)
Etsy
+7.78 (+13.16%)
SunOpta
-1.62 (-40.50%)
Now WBD
-2.18 (-7.46%)
TransEnterix
-0.42 (-13.08%)