What the Fed's New $4.5 Trillion Balance Sheet Plan Means for the Dow Jones Today

Garrett Baldwin

The Dow Jones today is flat in premarket hours as Fed Chair Janet Yellen will make a historic announcement today...

The Federal Reserve is set to announce more details about unwinding its massive $4.5 trillion balance sheet at today's FOMC meeting. That will officially signal the end of the Fed's stimulus program, going all the way back to 2007. Dow Jones futures are down 6 points this morning, while a spate of natural disasters continue to rock Central America and the Caribbean.

Here are the numbers from Tuesday for the Dow, S&P 500, and Nasdaq:

Now here's a closer look at today's most important market events and stocks, plus Wednesday's economic calendar.

The Five Top Stock Market Stories for Wednesday

• This afternoon, the U.S. Federal Reserve will conclude its two-day meeting on monetary policy. Fed Chair Janet Yellen will hold a press conference to announce the central bank's plans on how it will unwind its massive balance sheet. This will be considered the official announcement by the Fed that it is ending its stimulus program that began after the financial crisis. Investors should remain cautious, as this truly is the great unknown regarding market risk. In fact, investors should read Lee Adler's latest commentary on how the central bank's stimulus programs work and what it means for your investments. Be sure to read Sure Money Investor.

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• A merger between Sprint Corp. (NYSE: S) and T-Mobile Inc. (Nasdaq: TMUS) may finally be coming to fruition. For several months, speculation has heated up that the third- and fourth-largest wireless companies may finally come together. In addition, both firms have largely avoided marketing against each other to poach customers. Shares of both Sprint and T-Mobile rallied on Tuesday and should see additional gains in today's trading session.

• Bad news in the housing market. The number of Americans seeking mortgages fell by 9.7% last week. Economists are blaming the combination of hurricanes and increasing interest rates for the lack of applications to purchase a home. The Mortgage Bankers Association reported that its weekly application report indicated a 21.5% decline from the same period last year. Later this morning, we'll hear more on home sales when the existing home sales report is released at 10 a.m.

• Gun stocks are rallying again on news that the Trump administration will make it easier for manufacturers to sell small arms overseas. Shares of Sturm Ruger & Co. Inc. (NYSE: RGR) and American Outdoor Brands Corp. (NYSE: AOBC) both jumped more than 10% on the news that the president aims to reduce export regulations. Both companies have seen share prices and gun sales plunge since Trump took office. Both RGR and AOBC (formerly Smith & Wesson) were two of the top-performing stocks on the S&P 500 during the eight years of the Obama administration.

• Crude oil prices are on pace for their strongest third-quarter returns since 2004 thanks to increasing global demand and efforts by global producers to cap excessive supply. This morning, Iraqi oil leaders offered increased support to extend OPEC's supply agreement to help bolster prices. WTI crude oil price today added 1.0% and is now above $50.00 per barrel. Brent crude gained 1.0%.

Three Stocks to Watch Today: FDX, GIS, BBBY

• Shares of FedEx Corp. (NYSE: FDX) are off 1.16% in premarket hours despite news that the global shipping giant topped Wall Street expectations after the bell on Tuesday. The firm reported earnings per share (EPS) of $3.32, beating estimates by 17 cents. However, the firm missed consensus revenue estimates. Shares fell after the company slashed its 2018 earnings guidance to account for the financial impact of a major cybersecurity attack that hit the company earlier this year.

• The Retail Ice Age continued on Wednesday morning after a dismal earnings report from Bed Bath & Beyond Inc. (Nasdaq: BBBY). Shares plunged more than 14% after the company cut its full-year outlook and missed both profit and revenue expectations. The home goods retailer also reported weaker-than-expected same-store sales.

• Shares of General Mills Inc. (NYSE: GIS) fell nearly 5% in premarket hours after the iconic maker of Cheerios fell short of Wall Street earnings expectations before the bell. The firm reported EPS of $0.71 on top of $3.679 billion in revenue. Consensus analyst expectations called for EPS of $0.77 on top of $3.786 billion in revenue.

• Look for additional earnings reports from Herman Miller Inc. (Nasdaq: MLHR) and 8point3 Energy Partners LP (Nasdaq: CAFD).

Wednesday's U.S. Economic Calendar (all times EDT)

• MBA Mortgage Applications at 7 a.m.
• Existing Home Sales at 10 a.m.
• EIA Petroleum Status Report at 10:30 a.m.
• FOMC Meeting Announcement at 2 a.m.
• FOMC Forecasts at 2 a.m.
• Fed Chair Press Conference at 2:30 a.m.

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Garrett Baldwin

About the Author

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Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.

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