The stock market was mixed on Wednesday at 12:20 p.m. EST, with the Dow Jones Industrial Average (DJINDICES:^DJI) lagging the other major indices. The Dow was down 0.2% at that time as the market prepared for an announcement from the U.S. Federal Reserve in the afternoon.
Dragging down the Dow were blue chip stocks Home Depot (NYSE:HD) and Boeing (NYSE:BA). Home Depot provided guidance for 2020 that fell short of expectations, while Boeing was hit by comments from the FAA administrator that suggest the 737 Max won't be recertified until sometime in 2020.
Home Depot's outlook falls short
Shares of home improvement retailer Home Depot were down 2.1% after the company provided preliminary guidance for fiscal 2020. Analysts were expecting a bit more than what Home Depot was able to deliver.
Home Depot expects sales to grow by 3.5% to 4% in fiscal 2020, driven by comparable sales growth in the same range. The consensus analyst estimates called for 4.4% sales growth and 4.3% comparable sales growth. Home Depot also expects to produce an operating margin of 14% and a return on invested capital of 45%.
The company reaffirmed its fiscal 2019 guidance, which it lowered last month when it reported its third-quarter results. Home Depot expects sales growth of 1.8%, comparable sales growth of 3.5%, and earnings-per-share growth of 3.1%. EPS should come in around $10.03, putting the price-to-earnings ratio at about 21.
One reason for the 2019 guidance cut in November was that Home Depot's investments are taking longer than expected to bear fruit. In the long run, CEO Craig Menear sees the company's strategy paying off: "We are confident that the investments we are making in the One Home Depot experience will address the evolving needs of our customers. We are building on our distinct competitive advantages to capitalize on a large and fragmented market opportunity and extend our leadership position for years to come."
Including Wednesday's tumble, shares of Home Depot are up about 23% year to date.
A setback for Boeing's 737 Max
In November, airplane manufacturer Boeing said that it expected its grounded 737 Max planes to return to service in January, with deliveries potentially resuming in December. That timeline was optimistic given the regulatory steps required to get the plane back in the air.
On Wednesday, Federal Aviation Administration administrator Steve Dickson told CNBC that the recertification process for the 737 Max would extend into 2020: "Like I said there are a number of processes, milestones, that have to be completed. If you just do the math, it's going to extend into 2020."
Dickson declined to provide a timeline for recertification, saying that there are 10 to 11 milestones yet to be completed before the plane can be approved. Shares of Boeing were down 1.2% on the news.
Some major airlines have already cancelled 737 Max flights well into 2020. Southwest Airlines has removed the planes from its schedule through March 6, while American Airlines has done the same through March 4.
While it's still possible that the 737 Max will fly again in very early 2020, it may take longer to recertify the planes than Boeing's optimistic estimates suggest.