US Stocks Rise Before Federal Reserve Meeting; Oil Rebounds
NEW YORK (AP) — U.S. stocks are climbing Wednesday morning as a modest recovery in oil prices pulls energy companies slightly higher following huge losses a day earlier.
Markets were relatively quiet as the Federal Reserve wraps up its last meeting of the year. Investors expect the Fed to raise interest rates again, and are looking for details about its plans for 2019 amid signs the global economy is slowing down.
KEEPING SCORE: The S&P 500 index rose 16 points, or 0.7 percent, to 2,562 as of 10 a.m. Eastern time. The Dow Jones Industrial Average added 131 points, or 0.6 percent, to 23,806. The Nasdaq composite gained 57 points, or 0.9 percent, to 6,841. The Russell 2000 index, made up of smaller-company stocks, picked up 8 points, or 0.6 percent, to 1,385.
FED FOCUS: The Fed will likely raise its short-term interest rate another quarter-point, to a range of 2.25 percent to 2.5 percent. The central bank has forecast three more hikes in 2019, but with investors worried about slowing economic growth and the financial markets slumping, experts expect the Fed to predict a slower path of increases next year. For stock markets, battered recently by a series of concerns related to mounting trade tensions between the U.S. and China, that could be cause for optimism.
The Fed's rates help set lending rates around the U.S., and higher rates tend to slow down economic growth because they make it more expensive for businesses and consumers to borrow money. The Fed's actions are part of a trend around the world, as other major central banks are either reducing their economic stimulus plans or raising rates. The global economy is already forecast to slow down in 2019 and investors are getting nervous rising rates will make it worse.
MEDICINE CABINET MERGER: Drugmakers GlaxoSmithKline and Pfizer said they will combine their consumer product businesses, bringing Pfizer's Advil pain medicine and Centrum supplements together with Glaxo's Sensodyne toothpaste. The companies said its combined sales will be more than $12 billion. GlaxoSmithKline of Britian will own two-thirds of the combined company. Its stock jumped 3.8 percent to $38.49 while Pfizer slipped 0.4 percent to $42.22.
LOST IN THE MAIL: FedEx said international shipping, especially in Europe, fell in its latest quarter, while the U.S.-China trade dispute is also affecting its business.
The shipping company posted a smaller profit than analysts expected and said it will cut spending and offer buyouts to some workers to help make up for the shaky results.
"The peak for global economic growth now appears to be behind us," Chief Marketing Officer Rajesh Subramanian said in a conference call with investors.
FedEx stock lost 9.2 percent to $168.03 and rival UPS skidded 1.3 percent to $96.04. FedEx has tumbled by about 33 percent this year, and UPS is down 19 percent.
ENERGY: Oil prices bounced back slightly after plunging on worries about rising supplies and weakening global growth, which could weigh on demand. Benchmark U.S. crude climbed 1.9 percent to $47.12 a barrel in New York. It dropped 7 percent Tuesday and closed at a 16-month low, and has fallen almost 40 percent since Oct. 3. Brent crude, used to price international oils, was up 1.3 percent to $56.97 a barrel in London.
EUROPE: European stocks rose after Italy's government reached an agreement with the European Commission on its budget plans. That avoids a legal dispute over the government's plan to ramp up spending. The Italian FTSE MIB jumped 1.4 percent. Germany's DAX added 0.5 percent while the CAC 40 in France rose 0.4 percent. The British FTSE100 gained 0.7 percent.
CONTACT HIGH: Canadian marijuana grower Tilray rose another 4.9 percent to $80.25. The stock rocketed 16 percent Tuesday after the company announced that one of its subsidiaries will work with drugmaker Sandoz to collaborate on medical cannabis products and some non-smokable products as well. Tilray has products available in 12 countries and operations in Australia, New Zealand, Canada, Germany, Latin America and Portugal.
Tilray went public at $17 a share in July and peaked $300 a share in September as it and other marijuana shares made explosive gains. Despite enormous volatility,
Tilray nad many of its combpetitors have made big gains this year.
BONDS: Bond prices edged higher. The yield on the 2-year Treasury note fell to 2.65 percent from 2.66 percent, and the yield on the 10-year note fell to 2.81 percent from 2.82 percent.
ASIA: Japan's Nikkei 225 index fell 0.6 percent and while South Korea's Kospi rose 0.8 percent. Hong Kong's Hang Seng was 0.2 percent higher.
CURRENCIES: The dollar slipped to 112.19 yen from 112.53 yen. The euro rose to $1.1429 from $1.1357 and the British pound rose to $1.2667 from $1.2639.
AP reporter Marley Jay