After starting the session in positive territory, U.S. stocks turned sharply lower on Wednesday as skittish investors digested a downgraded economic outlook from the Federal Reserve, as well as its decision to hike interest rates for the fourth time this year. Both the Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC) endured a roughly 1.5% decline.
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The drop was broad-based, but tech names were hit particularly hard, and the Technology Select Sector SPDR ETF (NYSEMKT:XLK) fell 2%. Industrials also fared badly in the sell-off, leaving the Industrial Select Sector SPDR ETF (NYSEMKT:XLI) down 1.9%.
GE Healthcare's spinoff moves forward
Shares of General Electric rose 5.4% following reports that the industrial conglomerate has filed confidential paperwork for the initial public offering of its heathcare business, GE Healthcare. Citing "people familiar with the matter," multiple news outlets suggested today that the IPO would likely happen in the spring of 2019.
For perspective, GE initially announced its plan in June to make the healthcare segment a stand-alone business. But those plans were cast into doubt two months ago following the surprise ouster of then-CEO John Flannery, who has since been replaced by former Danaher head Larry Culp.
GE, for its part, declined to comment on the new filings. But in an emailed statement to Bloomberg, it did reiterate its assertion in June that "as an independent global health-care business, we will have greater flexibility to pursue future growth opportunities, react quickly to changes in the industry and invest in innovation."
General Mills' wholesome quarter
General Mills stock jumped as much as 10% early in the session, later settling to close up 5% after the consumer foods giant announced solid fiscal second-quarter 2019 earnings. Quarterly revenue increased 5.1% year over year to $4.41 billion -- technically below the $4.51 billion most analysts were modeling -- driven by the company's April acquisition of Blue Buffalo Pet Products. That translated into a 2% increase in adjusted earnings per share to $0.85, easily exceeding consensus estimates for EPS of $0.81.
"I'm pleased that our results through six months keep us on track to deliver our full-year targets," stated Chairman and CEO Jeff Harmening. "Our cost and capital discipline has driven profit growth ahead of our expectations in the first half."
Harmening added that the company is taking steps to accelerate revenue growth in the second half, led by its U.S. cereal and snacks segments and expanded distribution for the Blue Buffalo brand.
As such, General Mills reiterated its full-year outlook for revenue growth in the range of 9% to 10% at constant currency, assuming organic net sales will be flat to up 1%. On the bottom line, the company is still targeting adjusted earnings per diluted share to be flat to down 3% from $3.11 last fiscal year.