Most of the stock indexes on the New York Stock Exchange ended the first trading session of the week mostly with declines, as investors await the start of the 2-day meeting of the US Federal Reserve. The analysts forecast a 25 basis point cut in basic interest.
The blue-chip index Dow Jones Industrial Average rose by 0.11% to 27,221.35 points. The broader S&P 500 declined by 0.16% to 3,020.97 points, while the technology Nasdaq Composite fell by 36.88 points, or 0.44%, to 8,293.33 points.
The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was up 5.51% to 12.83.
The US Federal Reserve will announce on Wednesday whether it will cut interest rates, with Fed Governor Jerome Powell also speaking about the state of the economy during a press conference at 2:30 pm EST.
If the Fed cuts interest rates, it will be their first decline since 2008. The regulator is aiming to keep inflation below 2%, having problems maintaining price rises in the last few months despite signals of the stability of the low unemployment economy.
Investors are trapped between the hope for rate cuts — which would make it cheaper for companies to borrow — and recent better-than-expected economic data that calls into question whether a growth-boosting rate cut is really necessary.
US President Donald Trump has once again criticized the Fed’s policy, saying that “the European Union and China will lower their key interest rates and inject money into their financial systems, which will help manufacturers sell their products. At the same time, with inflation low, our Fed is doing nothing – and is likely to do very little compared to other banks”.
The US officials will arrive in China today to resume trade talks. However, few analysts believe it is possible to make a major breakthrough in terms of a trade agreement between the two largest economies in the world.
On the bond markets, the yields on 10-year and 30-year US Treasuries fell to 2.06% and 2.587%, respectively
Corporate stocks performance
Shares of Amazon, Microsoft and Facebook fell by 1.6%, 0.2%, and 1.8% respectively.
The stocks of Parker-Hannifin Corp dropped by 1.20% after the company announced its acquisition of Exotic Metals Forming Co on Monday, in a deal valued at 1.56 billion USD.
Beyond Meat Inc wiped out 5.44% of its market cap after reporting earnings after the close of trade Monday, its second earnings announcement since going public in early May. Shares have risen nearly 840% to 234.90 USD since their debut.
Mylan shares rallied 12.6% early Monday after announcing the deal with Pfizer and after the company released second-quarter adjusted profit and revenue that beat expectations.
Pfizer shares fell by 3.8%, following the news, and after the Dow component reported second-quarter earnings that beat expectations, but revenue that fell short.
Boeing shares fell by 1.4% after analysts at Standard & Poor’s cautioned they may lower their credit rating for the world’s biggest planemaker because of the ongoing crisis in its 737 MAX program.
Cancer diagnostics company Exact Sciences will acquire healthcare company Genomic Health for about 2.8 billion USD. The shares of Exact Sciences fell slightly, while Genomic Health advanced by 6.4%.
Shares of Parker Hannifin dipped 1.2% after the aerospace motion and control-technology company said it would acquire aircraft exhaust systems maker Exotic Metals Forming Co in a 1.56 billion USD all-cash deal.
The top performers on the S&P 500 were Mylan NV (+12.57%), Chipotle Mexican Grill Inc (+3.26%) and Cigna Corp (+2.96%), while on the flipside were Nektar Therapeutics (-5.94%), National Oilwell Varco Inc (-4.74%) and Pfizer Inc (-3.83%).
Corporate earnings reports
Beyond Meat shares fell sharply in extended trading Monday on news the company would embark on a secondary offering of 3.25 million shares only three months after its IPO. That report followed the release of mixed second-quarter results and a raised 2019 revenue forecast. Shares of the company fell more than 13% in extended trading, hovering around 191 USD per share. The stock closed Monday up 788% since its May initial public offering. Shares initially rose on the earnings report, then fell sharply after the stock offering was announced. Shareholders plan to sell 3 million shares, while 250,000 shares will be offered by the company itself. Based on Monday’s closing price of $222.13 per share, the offering could raise 721.9 million USD for Beyond and selling shareholders. Beyond will not receive any proceeds from the stock investors are selling, but it will earmark the proceeds of the stock it’s selling to expand product and supply, marketing and for general working purposes. Executives on an earnings conference call declined to comment further on the offering. According to regulatory filings, CEO Ethan Brown plans to sell 39,130 shares, which could net him 8.7 million USD. The CFO Mark Nelson is planning to sell 55,530 shares, potentially earning 12.3 million USD from the sale.