U.S. stocks were little changed midsession Wednesday, as weakness in consumer stocks was offset by gains in technology stocks led by Apple Inc., while investors waited for a Federal Reserve policy decision that is widely expected to result in the first interest-rate cut in more than a decade.
The early end to the latest round of U.S.-China trade talks in Shanghai, without much sign of progress, weighed on investor sentiment also, though the two sides agreed to meet again in September.
How are the major benchmarks faring?
The Dow Jones Industrial Average DJIA, +0.09% was up 5, or 0.02%, to 27,203, while the S&P 500 index SPX, +0.13% gained 2 points, or less than 0.1%, to trade at 3,015, and the Nasdaq Composite Index COMP, +0.28% climbed 23 points to reach 8,296, a gain of 0.3%.
On Tuesday, the Dow closed down 23.33 points, or 0.1%, at 27,198.02, while the S&P 500 index fell 7.79 points, or 0.3%, to 3,013.18 and the Nasdaq Composite Index retreated 19.71 points to 8,273.61, a slump of 0.2%.
So far this month, the Dow has climbed 2.3%, the S&P 500 has advanced 2.4%, while the Nasdaq has returned 2.2%.
What’s driving the market?
Apple AAPL, +4.34% shares traded at the highest level in nine months Wednesday after the technology giant shrugged off a slide in iPhone sales and reported better-than-expected second quarter earnings and a robust outlook into the final months of its financial year, though analysts noted a large share buyback program is helping to support its valuation.
But General Electric GE, -0.71% slipped despite beating earnings estimates and raising its full year outlook.
Nearly 60% of S&P 500 companies have reported earnings for the second quarter so far and 76% have posted stronger-than-forecast quarterly profits, according to FactSet.
As Goldman Sachs noted, for the first time since the financial crisis, corporate buybacks are exceeding free cash flow. Total buybacks among all companies this year were up 26% through mid-July.
Meanwhile Wall Street is broadly expecting Jerome Powell’s Fed to lower its benchmark federal-funds rate Wednesday by a quarter-point to a range of 2%-2.25% from a current range of 2.25%-2.50%, marking the first cut in more than 10 years.
Investors will be watching to see if the central bank indicates more monetary easing is likely in months to come to combat the effects of the U.S.’s yearlong trade dispute with China. Some investors fear that the Fed could provide a less accommodative policy message than the market is pricing in and markets may, in turn, react poorly.
Peter Cardillo, chief market economist at Spartan Securities, said in a note that “the indices are likely to add further gains, notwithstanding a Fed statement that could be a bit more hawkish than expected, leaving the next move by the Fed in limbo.”
Read: Here’s how the stock market tends to perform when the Fed cuts rates
As for U.S. economic data, an estimate of private-sector job growth from payroll firm ADP and Moody’s Analytics showed 156,000 new jobs added in July, roughly in line with the 155,000 predicted by economists, according to Econoday.
Overnight U.S. and Chinese delegates, including Trade Secretary Robert Lighthizer and Treasury Secretary Steven Mnuchin, concluded the first round of talks since the G-20 gathering in May without any substantive developments on the tariff front, according to reports.
The White House, however, characterized the talks as “constructive,” and said “the Chinese side confirmed its commitment to increase purchases of United States agricultural exports,” according to a statement, with talks set to continue in Washington in early September.
Read: Trump says he wants more than ‘small’ Fed rate cut
Which stocks are in focus?
Apple Inc. AAPL, +4.34% stock rose 4.5% after the iPhone maker and Dow component late Tuesday reported better-than-expected second-quarter revenue growth. The slowdown in iPhone unit sales in the past couple of years has restrained Apple’s overall growth since its fiscal year ended Sept. 30, 2015, but its large share buyback program has helped to maintain EPS growth and its shares have nearly doubled in the past three years.
Shares of General Electric Co. GE, -0.71% slipped after the industrial conglomerate reported a second-quarter adjusted profit and revenue that topped expectations and raised its full-year outlook. GE said its loss was pegged at 1 penny per share, or 3 cents per share when looking at continuing operations. On an adjusted basis, however, GE earned 17 per share, a figure that compares to last year’s 8 cent profit. Revenues fell 4.3% from last year to $28.8 billion.
Shares of Micro Devices Inc. AMD, -8.24% fell after it projected weaker-than-expected revenue growth for its current quarter late Tuesday.
Shares of Humana Inc. HUM, +4.47% rose after the health-care company reported second-quarter profit and revenue that rose above expectations, and provided an upbeat full-year guidance.
Molson Coors Brewing Co. TAP, -8.12% stock fell 7.5%, after the beer purveyor reported second-quarter revenue and profits that fell below expectations.
Shares of Electronic Arts. Inc. rallied after the videogame maker beat expectations for sales and recognized a $1.7 billion on-paper tax benefit.
Check out: Here’s how the Fed could rattle the market instead of calm it down
How did other markets trade?
The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, -1.44% edged about one basis point lower to 2.049%.
See: How the Fed could throw a nasty curveball at bond-market bulls with a ‘hawkish cut’
In commodities markets, the price of crude oil CLU19, +0.69% rose 0.4% to nearly just above $58.26 per barrel on the New York Mercantile Exchange, after U.S. government data showed that domestic crude inventories dropped for a seventh week in a row, the longest stretch of declines in a year and a half.
Read: Oil bulls look to Fed rate cut to overcome demand worries
Gold prices GCQ19, -0.08% edged slightly higher to $1,430 per ounce, set for a fourth straight climb.
Also see: History suggests gold vulnerable to ‘sell-the-fact’ reaction if Fed delivers rate cut
The U.S. dollar index DXY, +0.09% was little changed at 98.04, hanging around its highest levels since May.
Check out: Markets are warning that ‘monetary policy will not work,’ says BofA Merrill Lynch
In Asia overnight Monday, China’s CSI 300 index 000300, -0.90% index fell 0.9%, Japan’s Nikkei 225 NIK, -0.86% lost 0.9% and Hong Kong’s Hang Seng HSI, -1.31% fell 1.3%. In Europe, stocks edged 0.1% lower, as measured by the Stoxx Europe 600 index SXXP, +0.17%.
