About The times. (Gainesville, Ga.) 1972-current | View Entire Issue (Dec. 19, 2018)
Jeff Gill | Business reporter 770-718-3408 | jgill@gainesvilletimes.com The Times, Gainesville, Georgia Wednesday, December 19, 2018 5 things to watch for today from the Federal Reserve BY MARTIN CRUTSINGER Associated Press WASHINGTON — The Federal Reserve is poised today to raise its key interest rate for the fourth time this year. But beyond that, the Fed’s plans are uncertain. What analysts do expect from the Fed is the message that it plans to become more flexible in its rate decisions starting next year. It will, in other words, tailor its rate policy more to the latest economic barometers and less to any preset course of steadily tightening credit. Behind the Fed’s shifting policy is a global slowdown, a U.S.-China trade war and a dizzying drop in stock prices that have combined to magnify the risks to the economy. On top of that, Chairman Jerome Powell has suggested that the Fed’s gradual rate increases over the past three years have already raised its benchmark rate nearly to the point where too many further increases could weaken the economy. Here are five things to watch for after the Fed meeting ends: Fewer future hikes? In September, the Fed projected Powell that it would raise its key short-term three rate times in 2019. That prediction was based on the median estimate of the Fed’s board members and regional bank presidents who serve on its rate-setting committee. Today, the Fed is widely expected to scale back its forecast to just two rate increases for next year. One way it would do so would be in its so-called “dot plot.” The dot plot displays the anonymous projections of individual Fed officials for the path of their benchmark rate as well as for inflation and economic growth. Economic outlook Each quarter, the Fed updates its outlook for economic growth based on the forecasts of its rate-setting commit tee. In its most recent outlook in September, the Fed pre dicted the economy would expand a robust 3.1 percent this year before slowing to still-solid 2.5 percent in 2019. Since then, a weakening in global growth has become more pronounced, posing a risk to the U.S. economy. China, the world’s second-largest economy, is slowing. So is Europe, where Italy is on the verge of recession and Britain is struggling to negotiate an exit from the European Union. In addition, interest-rate sensitive sectors of the U.S. econ omy such as housing and autos are under more pressure. Tumbling markets The stock market is enduring a painful stretch, with steep losses Monday sending U.S. stocks to their lowest levels in more than a year. Among the factors depressing the market are the Fed’s rates hikes. Given the persistent losses on Wall Street, investors will be watching to see if Powell drops any hint that the Fed considers the market’s plunge a factor in its rate decisions. Some analysts have speculated the Fed has been raising rates partly was out of concern extremely low rates over an extended period had helped swell asset bubbles in such areas as stock prices. Now, with stock prices far off their highs from earlier this year, the Fed may see no need to raise rates further as a way to prick a possible bubble. Trade conflicts Trump’s combative trade moves against China and other countries have escalated fears that the higher tar iffs the United States has imposed and retaliatory tariffs from U.S. trading partners will depress growth in the United States and other major economies. So far, Powell has taken care to express concern about rising tariffs while noting they might prove beneficial if they force China and other nations to lower their trade barriers and promote freer trade. That said, if the higher tariffs become entrenched and don’t result in a lowering of barriers, Powell has said global growth would be harmed. Trump effect Powell, who was Trump’s choice to lead the Fed, has endure increasing public attacks from the president. Trump is unhappy with the Fed’s continual rate hikes.. Trump fired off two such tweets this week in the run-up to the Fed meeting. On Monday, he called it “incredible” that the Fed would consider raising rates this week with “the outside world blowing up around us.” On Tuesday, he urged the Fed to consider a Wall Street Journal editorial that argued for a “prudent pause” in rate hikes. Stock market woes: Is a recession near? Slump fueled by concerns about corporate profits, debt, trade war MARK LENNIHAN I Associated Press Trader Gregory Rowe works Dec. 12 at the New York Stock Exchange in New York. BY JOSH B0AK Associated Press BALTIMORE - Fears of a recession have been mounting with the U.S. stock market appear ing to be headed for its worst December since 1931 — during the Great Depression. Wall Street’s sustained slump has been fueled by investor concerns about lower corporate profits, higher corporate debt, a festering trade war between the United States and China and a broader global slowdown. So is a U.S. recession imminent? Not necessarily. Plenty of economic gauges suggest that far from being derailed by a stock market that’s set to suffer its first annual loss in a decade, the $20 trillion U.S. econ omy is barreling forward. Employers are hiring, consumers are spending ahead of the holidays and economic growth has been brisk, thanks in part to President Donald Trump’s deficit-financed tax cuts. But the economy has been growing since mid-2009 and nothing — not even what’s become the second-longest U.S. expansion on record — lasts forever. As the expan sion has aged, economists and business leaders are increasingly predicting that it will end within the next two years. The fact is that recessions are a regular part of the economic cycle. A down turn won’t necessarily hap pen in 2019. But the free-fall in stock prices could hasten the day. Tuesday’s slight gain — the Dow Jones Industrial Average rose 82 points, or 0.4 percent, after having lost over 1,000 over the previous two days — was barely a respite. Here’s a look at how the movements of the stock market and the barom eters of the economy might determine the risks of a recession. Does a sustained fall in stock prices herald a recession? Sometimes. Not always. Both the previous two U.S. recessions overlapped with stock market sell-offs. The Dow plunged nearly 34 percent in 2008 after the housing bubble burst. And it shed about 7 percent in 2001 when the tech stock bubble burst. But stocks also declined in 2002 — a year when the U.S. econ omy expanded. The fact is that the stock market captures just a piece of the broader U.S. economy. Less than half of U.S. households even own any stock, according to New York University economist Edward Wolff. And more than 80 percent of the stock market’s value is controlled by the richest 10 percent of households, according to his calculations. How bad is the stock market decline? It’s painful. But Wall Street has endured far worse sell-offs. Year-to-date, the Dow has lost about 5 percent — just a small fraction of its 2008 plunge. And the recent losses follow an extraordi nary winning streak: From its bottom in March 2009, the Dow has rocketed 250 percent. This means that investors who have held on have earned a rich profit — even including the losses since October. What’s behind the economy’s strength? Look to the job market. The 3.7 percent unem ployment rate is near a half-century low. Average hourly wages have climbed 3.1 percent in the past 12 months, the strongest such increase since 2009. The solid employment picture has helped fuel consumer spending. Retail sales have grown 5.3 per cent so far this year as more Americans have eaten out and shopped online, accord ing to the Census Bureau. Does housing market point to a recession? This is tricky. By some measures, like the Census Bureau’s report on home construction, the housing market never really recov ered from the meltdown of a decade ago. As a result, housing has contributed rel atively little to the economic recovery, which makes it less likely to be a major force that tips it into a recession. What has generally recovered are average home prices. Home sales prices have been steadily rising faster than Ameri cans’ average wages for the past few years, according to the National Association of Realtors. This made some homeowners wealthier. But it also reduced affordability of homes for many would- be buyers. Until this past year, homebuyers had been helped by historically low mortgage rates. But mort gage rates began to creep up last year as it became clear that Trump’s tax cuts would swell the federal budget deficit. Are the fed’s rate hikes a risk for recession? The Federal Reserve has become a punching bag for Trump as the stock mar ket has tumbled. The Fed is widely expected to raise its key short-term rate for the fourth time this year on Wednesday, which would likely further raise borrow ing costs for consumers and businesses over time. The Fed is raising rates to try to keep inflation at its 2 percent annual target while maximizing employ ment. But if it miscalculates and raises rates too high or too fast, history suggests it could trigger a recession. Compounding the risk is that the Fed is also paring the huge bond purchases on its books, which resulted from the trillions in Treasury and mortgage bonds it bought to help the financial system recover from the 2008 finan cial crisis. Doing so magni fies the upward pressure on borrowing rates for consum ers and businesses. Could resolving a trade war with China stop a recession? Trump caused stocks to buckle when he ratch eted up taxes on Chinese imports in hopes of forcing Beijing to strike a deal that would protect U.S. technol ogy from theft and reduce the trade deficit with China. Stocks recovered some what when further tariff increases were suspended after Trump met with Pres ident Xi Jinping earlier this month at an international gathering in Argentina. A prolonged trade war could surely depress growth. But it’s unclear whether any new deal would speed growth to the point where a recession could be avoided. Stock Exchange Highlights V NYSE 11,502.16 -29.96 A Nasdaq S 6,783.91 +30.18 Gainers ($2 or more) Name Last Chg %Chg Navistar Starret Diebold SJuanB CentEIBr B AlamosGId Aphria n HeclaM pfB 56.50 Jianpu n 3.78 Forestar 13.74 27.57 6.86 2.89 4.76 7.62 3.44 5.85 +3.73 +15.6 +.78 +12.8 +.31 +12.0 +.41 +9.4 +.62 +.25 +.42 +3.88 +.25 +.90 +8.9 +7.8 +7.7 +7.4 +7.1 +7.0 Losers (S2 or more) Name Last Chg %Chg CgpVelLCrd 9.76 USCF Oil n 17.86 PSCrden 14.80 UBS 3xLCr 9.51 BPPru 21.04 Dynags pfA 18.25 PrUltShN s 15.08 PrUCrude rs13.96 Dynags pfB 17.91 DBCmdDL 2.05 -2.31 -19.1 -4.19 -19.0 -3.42 -18.8 -2.19 -18.7 -4.44 -17.4 -2.74 -13.1 -2.21 -12.8 -1.92 -12.1 -2.34 -11.6 -.25 -10.7 Most Active ($1 on more) Name Vol (00) Last Chg GenElec BkofAm ChesEng Oracle AT&T Inc FordM Kinross g FrptMcM Pfizer EgyTrnsfr 1466617 889281 529210 422353 419115 381971 306846 293751 282804 275504 7.28 +.13 24.47 2.12 -.13 45.85 +.12 29.75 8.47 -.11 -.03 3.08 +.07 10.60 +.01 42.40 12.94 -.71 -.46 Diary Advanced Declined Unchanged Total issues New Highs New Lows Volume 1,297 1,531 65 2,893 3 681 4,413,279,448 Gainers ($2 or more) Name Last Chg %Chg MarinSft rs 3.72 Greenpro n 3.68 HyreCar n 2.83 MeetGrp 3.98 Materialise 18.51 Tilray n 76.50 AmrRvr 14.16 TizianaLf n 8.35 SmartGIb n 31.32 HovnEn pf A 3.11 +1.16 +.66 +.49 +.61 +2.72 +10.61 +1.84 +.97 +3.23 +.31 +45.3 +22.0 +20.9 +18.1 +17.2 +16.1 +14.9 +13.2 +11.5 +11.1 Losers ($2 or more) Name Last Chg %Chg DovaPh n 6.88 ChampO hrs 7.35 AxoGen 21.36 Rosehill un 3.09 NF EngSv EvofemBio LoneRs n MotusGI n AC Immun n 9.72 NCSMItstn 5.76 8.68 3.41 4.43 2.75 -2.13 -23.6 -2.20 -23.0 -6.17 -22.4 -.74 -19.3 -1.99 -18.7 -.64 -15.8 -.74 -14.3 -.45 -14.1 -1.56 -13.8 -.91 -13.6 Most Active ($1 or more) Name Vol (00) Last Chg AMD 1010539 Microsoft 480311 MicronT 437952 RentACt 358020 Apple Inc 337487 SiriusXM 315767 Cisco 297401 Intel 280184 Facebook 236744 Biocept rs 236646 19.50 +.67 103.97 +1.08 34.11 +.23 13.03 -1.42 166.07 +2.13 6.15 +.03 44.06 -.14 47.74 +.66 143.66 +3.47 1.14 +.45 Diary Advanced Declined Unchanged Total issues New Highs New Lows Volume 1,170 1,781 115 3,066 11 640 2,521,771,463 Stocks of Local Interest YTD Name Ex Div Yld PE Last Chg %Chg AFLAC S 1.04 2.3 14 44.54 +.22 0.0 Haverty .72 3.8 20 19.11 -.07 -15.6 AT&T Inc 2.04 6.9 6 29.75 -.11 -23.5 HeliosM rs .02 +.00-100.0 AbbottLab 1.28 1.8 30 70.08 +.33 +22.8 Hershey 2.89 2.8 23 104.36 -.81 -8.1 AMD 19.50 +.67 +89.7 HomeDp 4.12 2.4 19 170.04 +2.07 -10.3 Altria 3.44 6.8 16 50.89 -1.46 -28.7 Intel 1.20 2.5 18 47.74 +.66 +3.4 Apple Inc 2.92 1.8 17 166.07 +2.13 -1.9 IBM 6.28 5.4 9 116.65 +.55 -24.0 ATMOS 1.94 2.1 18 94.52 -1.04 +10.0 JohnJn 3.60 2.8 18 130.42 +1.28 -6.7 AutoZone 17 857.24 +3.06 +20.5 Kinross g 24 3.08 +.07 -28.7 AveryD 2.26 2.5 26 89.60 +.43 -22.0 Lowes 1.92 2.1 20 91.46 +1.01 -1.6 BB&T Cp 1.62 3.7 13 44.16 -.99 -11.2 McDnlds 4.64 2.6 27 179.71 -1.08 +4.4 BP PLC 2.38 6.3 11 37.82 -.59 -10.0 Merck 2.20 3.0 28 74.33 -.90 +32.1 BkofAm .60 2.5 12 24.47 ... -17.1 MicronT 3 34.11 +.23 -17.0 BarnesNob .60 9.4 6.36 -.13 -5.1 Microsoft 1.84 1.8 43 103.97 +1.08 +21.5 BarrickG .28 2.0 77 13.88 +.23 -4.1 NorflkSo 3.20 2.2 22 148.36 +.78 +2.4 Biocept rs 1.14 +.45 -94.5 OfficeDpt .10 3.8 7 2.61 +.03 -26.3 Boeing 6.84 2.1 31 328.06+11.93 +11.2 Oracle .76 1.7 49 45.85 +.12 -3.0 BrMySq 1.64 3.2 51 51.56 +.64 -15.9 Penney 1.20 ... -62.0 CSX .88 1.4 9 63.89 -.79 +16.1 PepsiCo 3.71 3.3 32 111.84 -1.03 -6.7 CampSp 1.40 3.6 14 38.49 -.34 -20.0 Pfizer 1.44 3.4 17 42.40 -.71 +17.1 Caterpillar 3.44 2.8 12 124.27 -.20 -21.1 PhilipMor 4.56 6.1 18 75.17 -6.23 -28.8 ChesEng 3 2.12 -.13 -46.5 Primerica 1.00 1.0 12 101.98 +.20 +.4 Chevron 4.48 4.1 23 109.74 -2.71 -12.3 ProctGam 2.87 3.1 23 92.49 -.28 +.7 Cisco 1.32 3.0 19 44.06 -.14 +15.0 RegionsFn .56 4.2 11 13.23 -.16 -23.4 Citigroup 1.80 3.3 9 53.93 -.32 -27.5 RentACt .32 2.5 22 13.03 -1.42 +17.4 CocaCola 1.56 3.2 91 48.32 -.01 +5.3 SiriusXM .05 .8 34 6.15 +.03 +14.7 Comcast s .76 2.1 17 35.65 -.56 -10.6 SouthnCo 2.40 5.3 21 45.53 -.47 -5.3 ConAgra .85 3.0 14 28.56 -.45 -24.2 SunTrst 2.00 3.9 9 50.85 -.94 -21.3 Cummins 4.56 3.5 37 131.34 -.11 -25.6 SynrgyPh .11 -.01 -95.2 Disney 1.76 1.6 15 109.45 -1.17 +1.8 SynovusFn 1.00 3.2 11 31.33 -.53 -34.6 DowDuPnt 1.52 2.9 17 52.29 +.61 -26.6 3M Co 5.44 2.8 27 194.56 +1.74 -17.3 EnCana g .06 1.1 9 5.58 -.15 -58.1 Torchmark .64 .8 6 75.83 -.06 -16.4 EgyTrnsfr 1.22 9.4 15 12.94 -.46 -25.0 Tyson 1.20 2.3 10 52.38 -1.09 -35.4 ENSCO .04 1.1 3.77 -.17 -36.2 UtdCmBks .64 3.0 13 21.48 -.55 -23.7 Equifax 1.56 1.6 16 95.12 -2.12 -19.3 UPS B 3.64 3.7 16 97.28 +.41 -18.4 ExxonMbl 3.28 4.6 13 72.00 -2.04 -13.9 VerizonCm 2.41 4.3 7 55.65 -.30 +5.1 Facebook 27 143.66 +3.47 -18.6 Vodafone 1.74 8.8 19.84 -.17 -37.8 FordM .60 7.1 4 8.47 -.03 -32.2 WalMart 2.08 2.3 52 91.08 +.31 -7.8 FrptMcM .20 1.9 7 10.60 +.01 -44.1 Weathflntl .39 +.01 -90.7 GenElec .04 .5 7.28 +.13 -58.3 WeisMk 1.24 2.7 11 46.01 +.20 +11.2 GenuPrt 2.88 3.0 21 96.21 -.29 +1.3 WellsFargo 1.72 3.7 11 46.52 -.09 -23.3 HP Inc .64 3.0 7 21.41 -.01 +1.9 YumBrnds 1.44 1.6 32 90.10 +.39 +10.4 YTD Name Ex Div Yld PE Last Chg %Chg Stock Footnotes: g = Dividends and earnings in Canadian dollars, h = Does not meet continued-listing standards. If = Late filing with SEC. n = New in past 52 weeks, pf = Preferred, rs = Stock has undergone a reverse stock split of at least 50 percent within the past year, rt = Right to buy security at a specified price, s = Stock has split by at least 20 percent within the last year, un = Units, vj = In bankruptcy or receivership, wd = When distributed, wi = When issued, wt = Warrants. Fund Footnotes: m - Multiple fees are charged, usually a marketing fee and either a sales or redemption fee. Source: The Associated Press. Sales figures are unofficial. Stock Market Indexes Dow Jones industrials Close: 23,675.64 Change: 82.66 (0.4%) 27,000 26,000 25,000 24,000 25,800 24,620* 23,440 10 DAYS J J A S 0 N D 52-Week Net YTD 12-mo High Low Name Last Chg %Chg %Chg %Chg 26,951.81 23,344.52 Dow Industrials 23,675.64 +82.66 +.35 -4.22 -4.36 11,623.58 9,356.77 Dow Transportation 9,445.47 +41.94 +.45 -10.99 -10.35 762.26 647.81 Dow Utilities 728.05 -4.16 -.57 +.65 -.79 13,637.02 11,480.08 NYSE Composite 11,502.16 -29.96 -.26 -10.20 -9.77 8,133.30 6,630.67 Nasdaq Composite 6,783.91 +30.18 +.45 -1.73 -2.58 1,309.73 1,118.69 S&P 100 1,132.03 +1.40 +.12 -4.32 -4.73 2,940.91 2,530.54 S&P 500 2,546.16 +.22 +.01 -4.77 -5.05 2,053.00 1,687.27 S&P MidCap 1,694.77 +.46 +.03 -10.83 -10.66 30,560.54 26,014.84 Wilshire 5000 26,158.23 -1.93 -.01 -5.89 -5.98 1,742.09 1,372.73 Russell 2000 1,377.18 -.96 -.07 -10.31 -10.38 Mutual Funds Name Total Assets Obj ($Mlns) NAV Total Return/Rank 4-wk 12-mo 5-year Pet Load Min Init Invt Vanguard 500ldxAdmrl LB 253,238 234.93 -6.8 -3.5/A +9.2/A NL 3,000 Vanguard TtlSMIdxAdmrl LB 203,888 63.39 -7.0 -4.2/B +8.7/A NL 3,000 Fidelity 500ldxlnsPrm LB 164,099 88.52 -6.8 -3.5/A +9.3/A NL 0 Vanguard TtlSMIdxinv LB 129,896 63.36 -7.0 -4.3/B +8.6/B NL 3,000 Vanguard TtlnSIdxInv FB 128,269 15.36 -4.5 13.2/B +1.5/B NL 0 Vanguard TtlSMIdxIns LB 123,279 63.40 -7.0 -4.2/B +8.7/A NL 5 000,000 Vanguard Insldxlns x LB 116,738 230.99 -6.8 -3.5/A +9.3/A NL 5 ,000,000 Vanguard InsidxInsPlus x LB 104,731 231.00 -6.8 -3.5/A +9.3/A NL100,000,000 Vanguard TtlnSIdxInsPlus FB 95,758 102.80 -4.5 -13.1/B +1.6/A NL100,000,000 Fidelity Contrafund LG 91,616 11.12 -5.4 -2.2/C +9.9/B NL 0 Vanguard TtBMIdxAdmrl Cl 86,606 10.41 +1.5 -0.5/B +2.3/C NL 3,000 Vanguard WlngtnAdmrl x MA 86,207 64.39 -3.9 -2.9/A +6.7/A NL 50,000 Cl -Intermediate-Term Bond, FB -Foreign Large Blend, IH -World Allocation, LB -Large Blend, LG -Large Growth, LV -Large Value, MA -Moderate Allocation, WS -World Stock, Total Return: Chng in NAV with dividends reinvested. Rank: How fund performed vs. others with same objective: A is in top 20%, E in bottom 20%. Min Init Invt: Minimum $ needed to invest in fund. Source: Morningstar.
