U.S. stocks closed mostly, albeit modestly, higher Wednesday after the Federal Reserve released the minutes of its latest meeting, confirming the U.S. central bank's intention to keep interest rates steady -- at least for now.
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According to those minutes, Fed officials largely approved a "patient" approach to monetary policy in 2019 during their two-day March meeting, but suggested that if the economy improves, more interest rate hikes could be on the horizon.
At the same meeting, policymakers at the U.S. central bank unanimously voted to keep the benchmark federal funds rate steady in a target range of 2.25 percent to 2.5 percent. The Fed also signaled there will be no additional hikes for the remainder of 2019 because of concerns about slowing global growth -- a result of a more than year-long trade war between the U.S. and CHina and uncertainties about Brexit.
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Before the minutes were revealed the S&P 500 and Nasdaq Composite were modestly higher but the Dow Jones Industrial Average was fractionally lower on declining Boeing shares. But after the minutes came out the Dow turned positive and the other two major averages began rising.
The yield on the 10-year Treasury note dipped below 2.5 percent to its lowest level since April 1.
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Airline stocks rose. Delta reported stronger-than-expected earnings and revenue for the first quarter.
"Demand for Delta's product has never been stronger," President Glen Hauenstein said in a statement.
"With our customer-focused commercial initiatives delivering strong customer loyalty and top-line momentum, we now expect full-year revenue growth of 5% to 7%, an increase from our prior guidance."
JetBlue Airways could unveil plans for flight service to London and other European cities as soon as an all-hands meeting for employees on Wednesday, according to a report.
Despite the Energy Information Administration reporting that crude oil stockpiles rose by approximately 7 million barrels last week, the price of crude oil rose and, thus, boosted petroleum company shares.
The price of the West Texas Intermediate, the benchmark U.S. crude, hovered at a five-month high amid tight supplies resulting from OPEC-led output cuts and sanctions on Iran and Venezuela.
Meanwhile, the Labor Department said Wednesday that U.S. consumer prices climbed 0.4 percent last month, the fastest pace in 14 months but -- excluding volatile food and energy costs -- less than analysts expected. Overall, higher prices were noted for gasoline, electricity and shelter.
T-Mobile today officially unveiled its forthcoming home TV service, which will now be known as TVision Home. The service is the rebranding of Layer3 TV, a company T-Mobile acquired in 2017 to launch what it said would be a “disruptive new TV service” the following year. That launch, of course, had been delayed. Now it has an arrival date: April 14th, 2019.
According to T-Mobile’s new TVision Home website, the service will first be available in Chicago, Dallas-Fort Worth, L.A., NYC, Philadelphia, San Francisco, Washington D.C. metro, and Longmont, CO – areas Layer3 had been serving.
The service starts at $100 per month for over 150 channels, minus a $9.99/month discount for T-Mobile customers which will initially be offered to everyone. The channel lineup includes local broadcast stations, regional sports, and other traditional pay TV channels.
The TVision website says the full service has over 275 total channels available.
In addition, TVision Home includes a 400-hour HD DVR (with support for recording multiple programs simultaneously), voice control via either Amazon Alexa or Google Assistant, access to Nest security cameras, a range of 4K content, and over 35,000 on-demand movies and shows.
Users will be able to set up profiles, personalize their home screen, and access their own DVR recordings separate from other household members.
Social media content will also be available through the TV, including your Facebook photos and videos and your Twitter feed.
The service itself also includes streaming apps like Pandora, iHeartRadio, XUMO, CuriosityStream, Toon Goggles, and HSN, with plans to add Netflix, YouTube, YouTube Kids, and Amazon Prime Video.
Unlike cable TV which requires running wires in other rooms of the house, TVision will instead offer “Lite Boxes” that connect to the main set-top box over Wi-Fi for $10/month each.
What’s missing, however, is the promised “disruption.”
Even T-Mobile’s own press release says the average cable bill today is $107.30 per month. With a service that starts at $90 per month and then charges for additional TVs and premium channels on top of that, it’s not doing much better – even if it removes the hidden fees like activation or early termination fees. (T-Mobile will also help pay off your satellite TV contract up to $500 if you want to switch over without dealing termination fees.)
However, T-Mobile does promise that its prices won’t increase over time – which is something even the modern-day internet TV providers like Sling TV, DirecTV Now, YouTube TV, and others can’t say, as they’ve all rolled out prices increases in the past year.
But those internet TV services still offer a better deal beyond lower prices – they also let you watch through their app wherever you are, not just inside the home. T-Mobile’s service, meanwhile, will include a companion app for iOS and Android for in-home streaming only. When traveling, you’ll have to use the various channels’ standalone apps to access TV content, after authentication.
That means it’s more like a traditional pay TV provider, as users will be directed to apps – like ABC, HBO Go, NBC, ESPN, Starz, or HGTV, for example – when they want to watch TV on the go.
TVision Home today works over a broadband connection, but is designed for the soon-to-come 5G future where TV can be delivered over a wireless service – like, say, the one offered by the merger of T-Mobile and Sprint.
The company touts the promise of the merger, if approved, saying the combined entity would have the power to bring high-speed broadband via 5G to over half of U.S. households by 2024.
“TVision Home is about so much more than home TV… it’s TV built for the 5G era,” said Mike Sievert, COO and President of T-Mobile, in a statement. “With New T-Mobile, we’ll bring real choice, competition, better service, lower prices and faster speeds…right into your living room. And – speaking of speed – while the Cableopoly innovates at the pace of the cable companies, we’ll innovate at the pace of the internet to give customers more value and more freedom more quickly.”
Wednesday morning was generally quiet on Wall Street, with many market participants waiting to see what the minutes from the latest meeting of the Federal Open Market Committee will say about the likely direction of U.S. interest rates for the rest of 2019. As of just after 11 a.m. EDT, the Dow Jones Industrial Average(DJINDICES:^DJI) was down 15 points to 26,135. However, the S&P 500(SNPINDEX:^GSPC) was higher by 5 points to 2,883, and the Nasdaq Composite(NASDAQINDEX:^IXIC) picked up 39 points to 7,948.
Earnings season is just about to begin, and Delta Air Lines (NYSE:DAL) got an early start by announcing its latest results. Elsewhere, Tesla (NASDAQ:TSLA) investors turned their attention to Washington, with the hope that lawmakers will extend additional valuable tax credits to buyers of electric vehicles above and beyond what they've already done in past years.
Delta's ready for takeoff
Delta Air Lines saw its stock rise about half a percent following the airline's release of first-quarter financial results. The company said that its earnings per share jumped 28% from year-earlier levels on an adjusted basis, with total adjusted revenue rising at a healthy 7.5% clip.
Image source: Delta Air Lines.
Delta cited several contributing factors to its positive performance. Nonfuel unit expenses were down for the third quarter in a row, showing the airline's commitment to cost containment. Delta's efforts to take advantage of value-added opportunities showed up clearly in its top-line figures, where 55% of revenue came from non-ticket sources or from premium offerings. Corporate revenue in the U.S. market was especially strong, and Delta also said that its extended card agreement with American Express added about a percentage point to its 2.4% rise in unit revenue.
Delta sees clear skies ahead. "With the momentum in our business and our American Express contract renewal," said CEO Ed Bastian, "we have increased confidence in achieving our full-year plan." That includes positive guidance for the second quarter, including 6% to 8% sales growth, 1.5% to 3.5% gains in revenue per available seat mile, and earnings of $2.05 to $2.35 per share. Many investors continue to see Delta as the leader of the airline pack, and today's results provide evidence of the company's strength.
A less taxing Tesla?
Shares of Tesla rose 1% as investors tried to assess the potential for what could be a nice boost to its electric vehicle business. Reports surfaced this morning that lawmakers on Capitol Hill will propose new legislation that would expand the electric vehicle tax credit that Tesla buyers have been able to use to offset the cost of their vehicles.
Currently, the electric vehicle tax credit pays $7,500 to purchasers until a manufacturer sells 200,000 vehicles. At that point, the credit starts to phase out over a 15-month period. Tesla has already seen some of that impact, as its credit fell to $3,750 at the beginning of the year. By the end of 2019, the current law would eliminate the credit entirely for Tesla buyers.
The new legislation seeks to offer additional tax credits of $7,000 for up to 400,000 more vehicles per manufacturer. The current $7,500 figure would still remain in place for manufacturers that haven't yet hit the initial 200,000 limit, and the new $7,000 credit would phase out over nine months instead of 15. That makes the bill attractive not just for Tesla but for just about every automaker serving the U.S. market, most of which already have electric vehicle development plans in place.
Investors weren't happy with Tesla's most recent news on deliveries, and the fact that tax credits have been on the decline has weighed on even the most optimistic of Tesla's fans. Adding new credits would breathe new life into Tesla's value proposition for buyers and potentially reinvigorate interest in electric vehicles across the auto industry.
A bipartisan group of lawmakers plans to introduce a bill to expand federal tax credits for buyers of electric vehicles, in what could be a boon for the growing EV market.
The existing $7,500 tax credit for buyers of EVs phases out over 15 months once an automaker sells 200,000 electric cars. The tax credit for Tesla buyers was halved to $3,750 on Jan. 1; General Motor's tax credit was likewise cut in half starting April 1.
The bill, dubbed the Driving America Forward Act, would grant each automaker a $7,000 tax credit for an additional 400,000 vehicles after it exhausts the first 200,000 vehicles eligible for tax credits. It would shorten the phase-out schedule to nine months. The credits are paid directly to consumers, who can write them off on their tax returns.
"At a time when climate change is having a real effect on Michigan, today's legislation is something we can do now to reduce emissions and combat carbon pollution," Sen. Debbie Stabenow, D-Mich., one of the sponsors of the legislation, said in a statement. "Our bill will help create American jobs and cement Michigan's status as an advanced manufacturing hub."
Tesla shares rose 1.6 percent in morning trading Wednesday on the news.
Sens. Gary Peters, D-Mich., Lamar Alexander, R-Tenn., and Susan Collins, R-Maine, and Rep. Dan Kildee, D-Mich., signed on to the bill.
Electric vehicles comprise a tiny, but growing, share of the U.S. vehicle market. Support for low- and no-emissions vehicles has grown both in the U.S. and in other major automotive markets, such as China. Though Tesla has been a market leader in EVs, several automakers are planning to release fully electric cars, trucks and SUVs over the next few years.
"This would be a major shot in the arm for Tesla as this could be a much needed potential catalyst for demand in the U.S." said Wedbush analyst Dan Ives. "Ultimately, while there are still hurdles to get this legislation passed, it would result in an additional 40,000 Tesla vehicles sold domestically in 2019 based on our estimates. After a tornado of bad news the last few months this would finally be a positive data point for Musk & Co."
— CNBC's Phil LeBeau and Meghan Reeder contributed to this article. Reuters also contributed to this report.
Lyft shares dropped as much as 7.3% on Wednesday after it was reported its rival, Uber, was seeking a valuation of between $90 billion and $100 billion when it officially files to go public.
Uber plans to sell around $10 billion worth of stock when it officially files to go public on Thursday, Reuters reported on Tuesday, citing people familiar with the matter.
Uber's new projected valuation, according to Reuters, is below that of prior $120 billion estimates. In contrast, Lyft's market cap on Tuesday was just under $20 billion, having raised about $2.69 billion in its IPO last month.
Lyft has traded in a volatile fashion since its debut, which isn't uncommon for newly minted public companies.
The stock priced at $72 a share the evening before its IPO in late March, then officially opened at $87.24 a share, then dropped below its IPO price in its first full day of trading. It's now down about 27% from its opening price, and down 11% from where the stock initially priced.
Lyft analysts are concerned about the company's uncertain path to profitability and a highly competitive ride-hailing space. Regulatory uncertainties may also pose a challenge, some analysts say, while others say the stock is overvalued.
"While we believe the ridesharing market will continue to grow and expect LYFT to be a prime competitor, in our view, current valuations reflect an overly optimistic view of consumer behavior in the US," said Michael Ward, an analyst at Seaport Global, in a note to clients last week.
An ECB meeting, Fed minutes, U.S. inflation data and an emergency EU summit on Brexit are all lined up for investors (more details on all of that below). But this may all be a sideshow for Friday’s earnings and to be sure, after another IMF global growth downgrade and fresh trade tensions between the U.S. and Europe have dinged sentiment.
Disappointed that the S&P 500 on Tuesday snapped its longest string of victories since October of 2017, as Apple also narrowly missed a 10-day winning run? South African-based money manager Vestact notes that the iPhone maker has only notched four 10-day win streaks in its history as a public company, in an emailed note to clients.
“Think about that. Apple, the first listed company to be worth $1 trillion, has only had four 10-day winning streaks. Despite creating vast shareholder wealth over time, it has not all been happy days,” says Vestact.
Elsewhere in the technology sector, investors will note the Nasdaq Composite Index has been coming about 2.5% of last August’s record close of 8,109.69 for the last several sessions — a veritably stone’s throw away.
Our call of the day, from Daily Wealth blogger and Stansberry Research analyst, Steve Sjuggerud, says investors may be losing their nerve over tech stocks at precisely the wrong moment, and stand to miss out on more big gains.
He points to the most recent Commitment of Traders report, from the U.S. Commodity Futures Trading Commission (CFTC), which shows positioning of big institutional traders and small speculators and can sometimes indicate future direction of equities and other assets.
“Futures traders recently made record bets on lower prices for tech stocks. The last time we saw a similar extreme was last spring. The index spent the next several months marching higher, rising by double-digit percentage points,” he said, in a recent blog post.
Before last year, you’d have to go back to 2010 for a reading that negative, and from that point, tech stocks soared hundreds of percent, noted Sjuggerud.
“As the bull market continues, traders will pile back into U.S. stocks. That’ll cause a frenzy of higher prices. It’s a virtuous cycle that will fuel the Melt Up. causing prices to rise higher than anyone could imagine,” he said. “And when it does, tech stocks will be big winners.”
If you’re not familiar with the term ‘melt up,’ it basically refers to when an asset that has been steadily moving higher starts to see extremely fast movements up, driven by investor sentiment as they pile in amid fear of missing out (FOMO). It happened in 1999 as an example, when investors rode the dot-com boom higher, until its eventual collapse. Here’s one great explanation.
“When the crowd bets in one direction, the opposite is likely to occur,” maintains Sjuggerud.
Europe stocks
SXXP, +0.20%moved higher. The ECB left key rates unchanged and President Mario Draghi said at a press conference that risks for the region remain to the downside. Eastern. And a two-day emergency summit over Brexit kicks off in Brussels where leaders will debate a one-year delay to avoid the U.K. crashing out without a deal.
The IMF’s cut to its global growth forecast on Tuesday — the third time in six months — is still drawing chatter. Our colorful chart of the day, from the IMF (h/t The Daily Shot) helps put it all in perspective.
Indivior
INDV, -71.39%
is down 80% in London after the U.S. accuses the U.K. pharmaceutical group of a multibillion-dollar fraud to boost sales of its opioid-addiction treatment.
Joining the stampede of startup techs to list this year, PagerDuty hiked the price range of its IPO that’s expected this week (see five things to know about the DevOps group). And Uber is reportedly looking to offer around $10 billion worth of shares for its IPO, valued at up to $100 billion.
JPMorgan Chase & Co.
JPM, -0.26%
CEO James Dimon is among several big bank CEOs due to appear in front of the House Financial Services Committee on Wednesday, to discuss the financial industry, 10 years after the crisis. The potential for fireworks could be huge, say some.
The quote
“Please dismiss everybody. I believe you’re supposed to take the gravel and bang it.” — That was Treasury Secretary Steven Mnuchin trying to get out of an appearance in front that same committee on Tuesday.
“Please do not instruct me as to how I am to conduct this committee.” — That was top Democrat, California Rep. Maxine Waters, not having any of it. It’s gavel, by the way, said the internet, which was eating up that fiery exchange.
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