With the announcement that the Federal Reserve will continue tapering its bond buying, the major indexes all ended the day in the red. The Dow Jones Industrial Average (DJINDICES: ^DJI ) lost 114 points, or 0.7%, while the S&P 500 fell 0.61% and the Nasdaq declined 0.59%.
The central bank plans to keep short-term interest rates low to help support the economy but believes it can reduce its asset purchase amount by another $10 billion, which brings the total monthly amount to just $55 billion, down from an initial $85 billion a month. This is the first time we've seen stocks fall after the Fed announced a reduction to its asset purchasing, which is likely to be a sign that investors don't believe the economy can maintain its current growth rate if borrowing costs rise. For more about what the central bank had to say, click here.
On the individual stock front, a few companies reported earnings today -- among them FedEx, General Mills (NYSE: GIS ) , Guess? (NYSE: GES ) , and Vera Bradley (NASDAQ: VRA ) . To read about FedEx's results, click here or stick around to find out how the other three companies performed last quarter.
General Mills reported that revenue had dropped 1.2% from the same quarter last year to $4.38 billion, which was lower than analysts' estimates of $4.43 billion. Profit came in at $0.64 per share, but after removing one-time items, EPS were only $0.62, below the $0.64 Wall Street was expecting. The company said it was hurt by the poor weather in much of the country during the quarter, a decline in volumes, and foreign currency exchange rates. Lastly, management reaffirmed 2014 guidance of adjusted earnings within a range of $2.87 to $2.90 per share, Wall Street is expecting $2.87 per share. Shares of General Mills ended the day up just 0.06%.
Shares of Guess? fell 1.74% during the regular trading session and then another 6% in the after-hours session following the company's earnings release after the closing bell. The company reported that it made $0.82 per share on revenue of $768.4 million. Wall Street was looking for earnings per share of $0.78 on sales of $758.5 million. While last quarter the company performed well, management doesn't believe the good times will continue. For the first quarter, Guess? is predicting revenue to come in at around $520 million to $530 million and earnings per share to land within a range from a loss of $0.09 to a profit of $0.05 a share. Analysts had been predicting revenue of $546.3 million and EPS of $0.11. Furthermore, for the year management sees revenue of $2.53 billion to $2.58 billion and EPS of $1.40 to $1.60. The Street had estimated revenue of $2.6 billion and earnings per share of $2. Things may get worse for Guess? shareholders before they get better, as a string of downgrades are likely to follow today's release.
As for Vera Bradley, the company posted revenue of $157.5 million, above analysts' estimate of $146.89 million and earnings per share of $0.48, again higher than the $0.46 analysts were looking for. Shares rose 7.43% today after the results were released, even though management didn't paint a bright picture for the future. The leadership team said the company will continue to face external headwinds and challenges with the business moving forward. Revenue guidance for the current quarter was $116 million to $120 million and earnings per share of $0.11 to $0.13. Wall Street had predicted $123.08 million in sales and EPS of $0.22.
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