Fed Meets, Q3 Earnings Continue, Election Uncertainty Rules

Tuesday, November 1, 2016

Members of the Federal Open Market Committee (FOMC, or The Fed) are meeting today and tomorrow to discuss U.S. policy regarding interest rates. With the presidential election one week from today, it is highly unlikely the Fed will make a move, lest they get caught up in the media circus that has become the 2016 race for the White House.

Chances for an interest rate hike of 25 basis points are roughly 70% for next month, when the Fed meets again in mid-December. With strong domestic employment and the global economy gaining traction of late, it would seem an optimum time for the first raise since a year ago December.

Biggest movers in the early market this morning? Gannett (NYSE:GCI) has announced it is no longer pursuing the acquisition of TRONC (NASDAQ:TRNC) , the media business formerly part of The Tribune Company. It is unclear whether some agreement will be made to combine services of the two firms, but a straight takeover is now off the table. GCI shares, which had tumbled 50% over the past 6 months, are up 8% on this news. TRNC, on the other hand, is down 30% in the pre-market.

Q3 earnings season continues: Pfizer (NYSE:PFE) missed slightly on both top and bottom lines — $13.05 billion in sales and 61 cents per share were a touch lower than the $13.1 billion and 62 cents expected. Archer Daniels Midland (NYSE:ADM) beat bottom-line estimates easily — 59 cents per share topped the 47 cents expected — on $15.83 billion in the quarter, which was down from the Zacks consensus estimate of $16.05 billion. Kellogg (NYSE:K) also posted a big beat on earnings — 96 cents zoomed past the 87 cents estimated — but revenues of $3.25 billion was short the $3.29 billion expected.

However, with the omnipresent General Election looming, little else matters to investors at this point. A surprise move by the Fed is the only thing that could shock the market near-term. Although chances of a Hillary Clinton victory are roughly 3-to-1 right now, market participants remain wary of the spectre of a Donald Trump upset, which would infuse a big dose of uncertainty into the stock market.

Don’t take my word for it: check out Zacks Executive VP Steve Reitmeister’s take on the effects of the election in his latest Profit From the Pros article: What Hath October Brung Investors?

Mark Vickery
Senior Editor

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