Dow Rises as Stocks Claw Back Some Losses From Sharp Selloffs

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Wall Street Overview 

Stocks rose on Tuesday, Dec. 18, rebounding somewhat from Monday’s sharp selloff, as investors battled with slowing economic growth and rising political uncertainty.

The Dow Jones Industrial Average rose 202 points, or 0.86%, to 23,795, the S&P 500 gained 0.59%, and the Nasdaq was up 0.85%.  

Investors on Tuesday were looking to this week’s Federal Reserve meeting to help steady nerves amid one of the worst Decembers on record for U.S. equities. Donald Trump, in a tweet Tuesday, implored the Fed again not to raise interest rates for the fourth time this year.

I hope the people over at the Fed will read today’s Wall Street Journal Editorial before they make yet another mistake. Also, don’t let the market become any more illiquid than it already is. Stop with the 50 B’s. Feel the market, don’t just go by meaningless numbers. Good luck!

— Donald J. Trump (@realDonaldTrump) December 18, 2018

Stocks tanked Monday, Dec. 17, with the Dow plunging 500 points and the S&P 500, down 2.1%, closing at its lowest level since October 2017. Each of the three major stock indexes were nearing month-to-date losses of 8%.

Boeing Co. (BA) will pay a dividend of $2.055 a share, up 20% from the previous payout, and increased the size of its stock buyback program by $2 billion to $20 billion. Boeing said it purchased around $9 billion worth of shares under the previous plan, and expects buybacks to continue in January. Boeing said its dividend has increased by 325%, and share buybacks have hit 230 million, over the past six years.

“We think shareholders are likely to take a positive view towards this news, particularly on the aggressive dividend hike which underscores management’s confidence in the business,” Credit Suisse analysts wrote, noting the lighter-than-expected 2018 buyback “sets up a hefty Q1, particularly if recent weakness in shares continues.”

Boeing rose 3.5% on Tuesday.

Oracle Corp. (ORCL)  turned slightly lower after trading higher earlier in the session following adjusted earnings and revenue from the software company that topped analysts’ forecasts.

Adjusted profit in the quarter was 80 cents a share on revenue of $9.56 billion. Analysts were expecting earnings of 78 cents a share on revenue of $9.52 billion. Oracle said revenue from cloud services and license support in the quarter was $6.65 billion – analysts were looking for $6.63 billion.

On the earnings call, co-CEO Safra Catz guided for fiscal third-quarter revenue to rise 2% to 4% in constant currency, with forex acting as a 4% headwind. That implies revenue will be flat to down 2% in dollars, compared with a consensus for roughly 1% growth. Earnings are expected to be in a range of 83 cents to 85 cents a share, in line with consensus of 84 cents.

Oracle also said it expects full-year revenue growth of around 3% on a constant currency basis.

Johnson & Johnson (JNJ) reaffirmed guidance Monday and said its board authorized the repurchase of up to $5 billion of stock following a sharp selloff in shares of the drug and consumer products giant following reports it covered up knowledge of carcinogenic asbestos in its iconic baby powder.

The company reaffirmed full-year sales guidance of $81 billion to $81.4 billion and earnings guidance of $8.13 to $8.18 a share and said it would use the selloff as an opportunity.

“Based on our continued strong performance and, more importantly, the confidence we have in our business going forward, the board of directors and management team believe that the company’s shares are an attractive investment opportunity,”said Alex Gorsky, chairman and CEO, in a statement.

The stock rose 1.3%.

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Darden Restaurants Inc. ( DRI) earned 92 cents a share in its fiscal second quarter, beating estimates by 1 cent. Revenue of $1.97 billion came in slightly below forecasts while same-store sales of 2.1% topped forecasts of 2%.

 

Shares of the owner of Olive Garden and LongHorn Steakhouse rose 4.2%. 

 

T-Mobile US Inc. ( TMUS) and Sprint Corp. ( S) received approval from the Committee on Foreign Investment in the United States, moving the $26.5 billion merger of the telecommunication giants one step closer to completion. In addition, the U.S. departments of Justice, Homeland Security and Defense withdrew their requests to delay the transaction.

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2018-12-18 16:12:00

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