Consumer prices unexpectedly fall; Fed decision day; Nelson Peltz takes aim at DuPont
Stocks were slightly higher ahead of the Federal Reserve’s policy decision and Fed Chair Janet Yellen’s news conference Wednesday afternoon.
Meanwhile, more evidence this morning that inflation remains under wraps after accelerating in the second quarter.
Consumer prices unexpectedly fell for the first time in almost 1-1/2 years in August. The Labor Department reported that the Consumer Price Index fell 0.2% last month largely due to a big drop in energy prices, which offset an increase in food and housing costs. Economists were expecting overall prices to be unchanged.
The so-called core-measure, which strips out volatile food and energy costs was unchanged last month. Economists were looking for an increase of 0.2%.
Related: Sony warns of big loss; FedEx delivers a beat; General Mills misses estimates
In corporate news, FedEx (FDX) delivered a profit and revenue beat this morning thanks to strength in its express and ground businesses. The company also said yesterday it will raise shipping rates in the U.S. on average by 4.9% in January.
General Mills (GIS) eported earnings that missed estimates by $0.08. Quarterly profit fell 25% and sales also came in below expectations. The company is citing challenging U.S. market conditions and other factors for the shortfall. Earlier this month, the company said it would buy Annie's to expand its presence in the natural-and-organic-foods aisles.
Sony (SNE) stock tumbled in early trading after the Japanese consumer electronics company warned of a bigger-than-expected loss for the year of more than $2 billion as its smartphone business continues to bleed red ink. The company also said it would not pay a dividend this year for the first time since going public in 1958.
Adobe Systems (ADBE) shares were lower after the maker of Photoshop said that revenue for this quarter would be weaker than analysts' expected after reporting revenue slightly missed estimates last quarter as sales in its digital media business declined. However, earnings per share beat Wall Street's views.
DuPont (DD) shares rose on news that Nelson Peltz's hedge fund is calling for a breakup of the chemical giant. The stock is up more than 10% in the past year as of yesterday's close, but Peltz's fund is arguing that DuPont's businesses are too diverse for one company.
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Related: Corinthian sued in latest for-profit college crackdown
The Consumer Financial Protection Bureau is suing Corinthian Colleges (COCO) for a slew of predatory practices, including inflating job placement statistics to deceive students. The consumer watchdog also alleges Corinthian inflated tuition forcing students to take out private loan and then charged high rates, as well as a handful of other deceptive practices. Corinthian operates schools under the names Heald, Everest, and WyoTech around the country.
The for-profit college industry “has been under regulatory attack for some time,” points out Yahoo Finance Senior Columnist Michael Santoli. “One thing that we can really interpret from a lot of these investigations is that [these schools] were first marketing organizations and by far second an educational institution.”
A spokesman for Corinthian told the Wall Street Journal that the company disputes the allegations, and that the complaint is highlighting isolated incidents.
