Fed Decision; New Records; Major Earnings; Western Digital Disappointed

Fed Decision; New Records; Major Earnings; Western Digital Disappointed


The leading US indices reached new records after the Federal Reserve decided to leave interest rates unchanged. Dow Jones and the S & P 500 closed at new record levels. In addition, the US central bank reaffirmed the expectation that interest rates will be raised one more time this year and it was reported that in October it will begin to diminish its massive balance sheet.

The Dow Jones index closed 0.2 percent higher at 22,412.59 points and the broad S&P 500 increased 0.1 percent to 2508.24 points. However, the tech heavy NASDAQ Composite index dropped 0.1 percent to 6456.04 points.

The decision to maintain interest rates was generally expected in the financial markets. It is likely that interest rates will continue to rise in December. The Fed reiterated that interest rates will be gradually increased, with probably three steps next year.

In corporate news, FedEx gained 2 percent despite disappointing quarterly figures. The package caretaker suffered from a cyber-attack that hit its Dutch subsidiary TNT last summer. The company therefore also felt forced to lower its profit forecast for the entire financial year.

Software giant Adobe Systems, on the other hand, presented quarterly results that exceeded expectations of analysts. However, the share fell 4.2 percent.

General Mills, with well-known brands like Häagen-Dazs, Cheerios and Bugles, saw heavy selloff from investors and the share dropped nearly 6 percent. The food manufacturing titan missed earnings on souring yoghurt sales.

Bed Bath & Beyond also reported disappointing figures and plummeted 16 percent. The home goods retailer provided three reasons behind worse-than-expected Q2 results: restructuring costs, Hurricane Harvey and a new accounting standard. Looking ahead, it now expects EPS of $3 per share, with the balance of its future earnings divide nearly 20 percent in the ongoing quarter and about 80 percent in the next quarter.

San Jose-based Western Digital had to swallow 4 percent loss after its Japanese partner Toshiba announced sale of its flash memory business to a consortium led by investor Bain.

“We are disappointed that Toshiba would take this action despite Western Digital’s tireless efforts to reach a resolution that is in the best interests of all stakeholders,” Western Digital said. “Furthermore, it is troubling that Toshiba would pursue this transaction without SanDisk’s consent, as the language in the relevant JV agreements is unambiguous, and courts have entered multiple rulings in favor of protecting SanDisk’s contractual rights.”

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Javier Davis produces news on stocks, currencies, bonds, commodities, and real estate. His in-depth research covers most of the major financial markets in America, Europe, and Asia. His research is based on the interconnected relationships among economic and technical factors that drive valuations in the markets, with an emphasis on how to formulate investment strategies. From interest rates to inflation to economic growth and much more, the fundamental concepts presented on this website provide an essential foundation of knowledge for investors to profit in stocks, bonds, commodities, currencies, and real estate markets.