Equity futures were weaker in morning trading as worries over the virus, lockdowns and rocky vaccine rollouts all dampened risk appetite and the averages finished lower after the Fed ended its first policy meeting of the new year, even though the central bank committed to continue with its ultra-accommodative stance. Record revenues from Microsoft (MSFT) were providing some support for its shares in early trading, though the stock faded as the day wore on. Meanwhile, Boeing (BA) slid after having reported its largest annual loss on record. Reports from Apple (AAPL), Facebook (FB), and Tesla (TSLA) are due after the close today as the earnings pace continues to increase.
ECONOMIC EVENTS: In the U.S., durable goods orders rose 0.2% in December, which was weaker than expected, but much of the miss was in transportation orders, which declined 1.0%. Excluding transportation, orders were up a better than expected 0.7%.
In Federal Reserve news, the Fed kept its interest rate benchmark unchanged at 0%-0.25%, with the central bank saying that the pace of recovery in economic activity has moderated. The Fed added that it will continue to increase the Treasury's holdings by at least $80B each month, adding that overall financial conditions "remain accommodative."
TOP NEWS: Shares of Microsoft (MSFT) finished little changed following last night's stronger than expected fiscal Q2 results. Goldman Sachs analyst Kash Rangan, who raised the firm's price target to $315 from $285 and reiterates a Buy rating on the shares, noted that revenue upside was mainly driven by commercial cloud and server products. The analyst, who says the results validate his cloud thesis, added that Azure is poised for favorable comparison to industry leader Amazon Web Services (AMZN) at an estimated run-rate of $29B growing about 50%.
Boeing (BA) shares were 4% lower after the company reported worse than expected losses in the fourth quarter, driven in part by a $6.5B pre-tax charge recorded for its 777X program. Boeing now anticipates that the first 777X delivery will occur in late 2023. Separately, the UK Civil Aviation Authority announced that it will now allow UK airlines to operate passenger flights with the Boeing 737 MAX aircraft, "subject to close oversight."
Starbucks (SBUX) shares dropped 6.5% after the company reported fiscal Q1 results that included a global comparable store sales decline of 5%. In addition, Starbucks announced that Rosalind Brewer is resigning from her position as COO and group president. Subsequently, Walgreens Boots Alliance (WBA) announced the appointment of Brewer as the company's CEO, effective on March 15.
In other earnings news, AT&T (T) slid 2% after reporting Q4 results and guiding for FY21 adjusted EPS to be "stable with 2020." Of note, AT&T reported total domestic HBO Max and HBO subscribers have topped 41M and nearly 61M worldwide, with HBO Max activations having doubled since end of third quarter 2020.
In M&A news, Veritas Capital announced a bid to acquire Perspecta (PRSP) for $29.35 in cash.
Volatility, and massive surges higher, in some of the most shorted stocks in the market have continued, with GameStop (GME) and AMC Entertainment (AMC) continuing to be two of the headline examples of this phenomenon. Amid the volatile trading, Ameritrade has told clients of some restrictions being put on transactions involving GameStop and AMC, according to Bloomberg. Meanwhile, Melvin Capital, the hedge fund targeted by Reddit, closed out its short position in GameStop on Tuesday afternoon after taking a "huge" loss, Gabe Plotkin, the fund's manager, told CNBC's Andrew Ross Sorkin. As the so-called "short squeeze" continued, White House Press Secretary Jen Psaki said President Biden's economic team, including Treasury Secretary Janet Yellen, are "monitoring" the trading activity in GameStop. In addition, Federal Reserve Chair Jerome Powell declined to comment on the recent trading in GameStop shares when asked about the phenomenon during a press conference.
MAJOR MOVERS: Among the noteworthy gainers was Vir Biotechnology (VIR), which rose over 7% after announcing a collaboration with Eli Lilly (LLY) and GlaxoSmithKline (GSK) to evaluate a combination of two COVID-19 therapies in low-risk patients with mild to moderate COVID-19. Among the notable losers was Anthem (ANTM), which fell more than 7% after reporting quarterly results.
INDEXES: The Dow fell 633.87, or 2.05%, to 30,303.17, the Nasdaq lost 355.47, or 2.61%, to 13,270.60, and the S&P 500 declined 98.85, or 2.57%, to 3,750.77.
Microsoft
+0.48 (+0.21%)
Amazon.com
-93.15 (-2.80%)
Boeing
-7.95 (-3.93%)
Starbucks
-6.78 (-6.47%)
Walgreens Boots Alliance
+2.05 (+4.17%)
AT&T
-0.56 (-1.88%)
Perspecta
+2.57 (+9.80%)
GameStop
+199 (+136.30%)
AMC Entertainment
+14.92 (+302.02%)
Vir Biotechnology
+7.16 (+9.36%)
Eli Lilly
-5.17 (-2.43%)
GSK
-1.06 (-2.70%)
Ticker changed to ELV
-22.33 (-7.15%)