Stocks are higher at midday as investors react to earnings reports from a number of mega-cap companies, including a better than expected report from Apple (AAPL), and await the rate announcement due later this afternoon from the Fed.
ECONOMIC EVENTS: In the U.S., the advance goods trade deficit widened back out to $68.3B in December after narrowing to $63.0B in November. An index of pending home sales dropped 4.9% to 103.2 in December, missing estimates.
The Federal Reserve's FOMC meeting resumed, with the policy announcement due at 2 pm ET, although no changes are expected to the 1.50% to 1.75% funds rate band.
TOP NEWS: Shares of Apple are up 3% at midday after the company last night reported results that topped expectations. BofA analyst Wamsi Mohan, who raised his price target on Apple to $350 following the report, said that the wider revenue range for the new quarter "de-risks" the impact of coronavirus in China and also points to strong gross margins for Apple.
Boeing (BA) shares are up 1% near noon despite the company's report of steep losses and lower than expected revenue in the fourth quarter. Boeing said it sees an estimated $4B of abnormal production costs for the 737 MAX and confirmed that the 787 production rate will be reduced from the current rate of 14 airplanes per month to 12 airplanes per month in late 2020. Boeing President and CEO David Calhoun said the company is "focused on returning the 737 MAX to service safely and restoring the long-standing trust that the Boeing brand represents," adding that "the strength of our overall Boeing portfolio of businesses provides the financial liquidity to follow a thorough and disciplined recovery process."
McDonald's (MCD) reported better than expected fourth quarter sales and profits, including global comparable sales growth of 5.9% and U.S. comparable sales growth of 5.1%. Fellow restaurant giant Starbucks (SBUX) also reported a better than expected quarter, headlined by a global comparable store sales rise of 5% and Americas comparable store sales increase of 6% compared to the same period of last year. Starbucks CEO Kevin Johnson, in an interview with CNBC, said the company had intended to raise guidance, but it held off due to the still-undetermined impact of the coronavirus outbreak in China.
General Electric (GE) reported better than expected results, prompting a 10% jump in its share price and an upgrade from Bank of America. BofA analyst Andrew Obin upgraded General Electric to Buy from Neutral with a price target of $16, up from $12, noting that the company's Q4 Industrial free cash flow was better than his forecast and, "more importantly," its 2020 guidance for Industrial free cash flow was materially higher than his prior forecast.
AT&T (T) is sitting out the rally in a number of other mega-cap reporters after its earnings beat consensus but its revenue missed the sell-side forecast. Expressing more confidence than the current 3.5% share selloff, chairman and CEO Randall Stephenson said AT&T "delivered what we promised in 2019 and we begin this year with strong momentum in wireless, with HBO Max set to launch in May and our share retirement plan well underway."
MAJOR MOVERS: Among the noteworthy gainers was L Brands (LB), which jumped 12% after the Wall Street Journal reported that Les Wexner is in talks to step aside as CEO of the company, which is also exploring strategic alternatives for Victoria's Secret. Also higher were Macom (MTSI) and CommVault (CVLT), which gained a respective 16% and 8% after reporting quarterly results.
Among the notable losers was Xilinx (XLNX), which slid 10% after it reported quarterly results and said it plans to reduce its global workforce by about 7%. Also lower after reporting quarterly results were AMD (AMD) and Extreme Networks (EXTR), which fell 7% and 11%, respectively.
INDEXES: Near midday, the Dow was up 109.74, or 0.38%, to 28,832.59, the Nasdaq was up 31.63, or 0.34%, to 9,301.31, and the S&P 500 was up 11.01, or 0.34%, to 3,287.25.
