(Reuters) – Wall Street struggled for direction on Wednesday as investors geared up for a policy decision by the Federal Reserve later in the day.
Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., October 30, 2019. REUTERS/Brendan McDermid
The central bank is widely expected to cut interest rates for the third time this year to counter any fallout from a protracted U.S.-China trade war on the domestic economy.
After a modestly higher open, U.S. stocks slipped into the red. The interest rate sensitive banking sub-sector .SPXBK shed 0.6%. Five of the 11 major S&P 500 sectors were lower, with losses in the financial sector .SPSY weighing the most.
The Fed decision is due at 2 p.m. ET followed by a press conference from Chair Jerome Powell.
Traders have fully priced in a quarter percentage point rate cut, up from a nearly 40% chance a month earlier. Hopes of a rate cut and optimism around trade talks had pushed the benchmark S&P 500 to record highs in the last two sessions.
“Certainly a rate cut is widely factored in,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida. “Most people are looking for some sort of a hint that this will likely be it for a while.”
A Commerce Department report showed U.S. economic growth slowed less than expected in the third quarter as declining business investment was offset by resilient consumer spending and a rebound in exports, further allaying financial market fears of a recession.
Nearly half of the S&P 500 companies have posted quarterly results so far, of which 77.1% have beaten profit estimates. Still, analysts are expecting a 1.9% drop in third-quarter earnings, according to Refinitiv data.
General Electric Co (GE.N) jumped 10% after the industrial conglomerate beat quarterly profit estimates and raised its cash forecast for the year.
Yum Brands Inc (YUM.N) slid 9.8% after it missed quarterly profit expectations, hit by a write down in the value of its investment in delivery company GrubHub (GRUB.N) and unrelenting troubles at its Pizza Hut chain.
At 9:59 a.m. ET the Dow Jones Industrial Average .DJI was down 11.51 points, or 0.04%, at 27,059.91, the S&P 500 .SPX was down 2.84 points, or 0.09%, at 3,034.05 and the Nasdaq Composite .IXIC was down 9.97 points, or 0.12%, at 8,266.88.
Among other stocks, Mattel Inc (MAT.O) surged nearly 17% after the U.S. toymaker reported a surprise jump in quarterly revenue on higher demand for newer models of its flagship Barbie brand and dolls based on Korean pop-sensation BTS.
Johnson & Johnson (JNJ.N) rose 2.5% as the company said 15 new tests found no asbestos in a bottle of baby powder that the U.S. Food and Drug Administration says tested positive for trace amounts of asbestos. FDA said it stands by its finding.
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Declining issues outnumbered advancers for a 1.61-to-1 ratio on the NYSE and a 1.75-to-1 ratio on the Nasdaq.
The S&P index recorded four new 52-week highs and no new lows, while the Nasdaq recorded 27 new highs and 34 new lows.
Reporting by Arjun Panchadar and Medha Singh in Bengaluru; Editing by Anil D’Silva