A rare down day, only the third of this rally as the market used the Federal Reserve announcement as an excuse to sell. There really was nothing new in the comments from the Fed; we just have a market that has gone parabolic and needed some rest - any reason would have done. The S&P 500 fell 0.49% and the NASDAQ 0.55%. Damage was stronger in the small cap arena, as the Russell 2000 fell 1.39%, expressing today's selloff was more intense than the big cap indexes would have you believe. In economic data, the key thing that will one day move the Fed is an improvement in the labor data - private sector firm ADP showed October's data won't be too hot.
The ADP employment report for October found 130,000 jobs were created in the private sector. That was the lowest reading since April and was below expectations for a gain of 150,000 jobs.
Here are the longer term charts for the S&P 500 and NASDAQ - you can see with the NASDAQ specifically why the index is stalling out here a bit as its hitting the ceiling of this major channel it has been in for almost all of 2013. As for the S&P 500 a nice 20 point pullback to test the trendline it has recently broken above would be a nice consolidation pattern.
There is a lot of earnings related news today so we'll focus on those companies. Most notable is Facebook (FB) which reported after the close today and was initially up a lot but as the after hours session continues is back down to flat. There is some concern about growth metrics among the teen set it appears. At some point there is a limit to growth with Facebook as 1 in 7 humans on earth already use it.
Facebook may be feeling the pinch from teen-focused mobile-first social networks like Snapchat, as CFO David Ebersman said on today’s earnings call that Facebook “did see see a decrease in daily users specifically among younger teens”, though he prefaced that saying “usage of Facebook among US teens overall was stable from Q2 to Q3.” This is the first time Facebook has reported anything but increasing usage with teens.
Outside of that, mobile ads, which Wall Street is in love with - saw massive growth:
Facebook Inc posted strong growth in its mobile advertising business, driving a 60 percent increase in revenue that beat Wall Street's targets. Revenue from mobile ads, which appear on smartphones, represented 49 percent of Facebook's total advertising revenue in the third quarter, or roughly $880 million. Mobile ads generated roughly $150 million in the year-ago period, when Facebook was just beginning to develop its mobile ad business. Facebook's total revenue in the third quarter was $2.016 billion, ahead of the average analyst expectation of $1.911 billion.
Starbucks (SBUX) also reported - stock is down about 2% in after hours:
Starbucks Corp forecast 2014 profit below Wall Street's view, despite fourth quarter profits that jumped 34 percent on strong traffic gains and a rise in spending by its customers. Starbucks on Wednesday repeated its forecast for fiscal 2014 earnings in the range of $2.55 to $2.65 per share. Analysts' average estimate had called for a full-year profit of $2.67 per share. Profit increased to $481.1 million, or 63 cents per share, for the fiscal fourth quarter ended Sept. 29, from $359 million, or 46 cents per share, a year earlier. Global sales at Starbucks cafes open at least 13 months were up 7 percent during the latest quarter, driven by a 5 percent increase in traffic.
Two well known companies that reported earlier in the day were General Motors (GM) and Comcast (CMCSA) - GM has been range bound of late after a large move earlier this year, while Comcast has been a very strong stock of late. General Motors posted a better-than-expected quarterly profit on strong results in its core North American market and a smaller-than-anticipated loss in Europe. Comcast posted net income that beat analyst estimates as the company generated more cash flow at its cable unit and media arm, NBC Universal, than it had a year ago. The company posted lower quarterly revenue because it did not have the boost from the London Summer Olympics which aired on its networks a year ago.