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Stocks fall, Fed leaves rates unchanged

Stocks pulled back after a soaring Wednesday session.

The S&P 500 (^GSPC) fell 0.25%, or 7.08 points, at the end of trading Thursday. The Dow (^DJI) rose slightly by 0.04%, or 11.12 points. The Nasdaq (^IXIC) fell 0.53%, or 39.87 points.

On Wednesday, the S&P 500 and the Dow each posted their best one-day gains in the session following a midterm election since 1962.

With midterm elections now in the past, investors are turning their attention back to corporate earnings and interest rates. Earnings have been strong so far this season, with growth up 26% over last year through the end of last week, according to Credit Suisse data.

But that strength may not carry over to the next few years, some analysts believe. Goldman Sachs predicts earnings per share will grow by 6% in 2019 to $173, but will then slow to 4% growth in 2020. This diverges from consensus predictions of EPS growth of 8% in 2019 and 10% in 2020.

“Economic growth is the most important macro driver of S&P 500 EPS and points to positive but decelerating growth through 2020,” Goldman Sachs analysts wrote in a note Thursday. “Although U.S. economic activity has been strong in 2018, the boost from fiscal policy and financial conditions is fading.”

The Federal Reserve released its latest policy announcement at 2 p.m. Thursday and left the federal funds target range unchanged at between 2% and 2.25%, as had been widely expected.

However, Fed officials did say in the statement that they expect “further gradual increases,” supporting analysts’ expectations of a fourth rate hike this year in December.

Fed Chairman Jerome Powell did not hold a press conference following the November statement.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., November 7, 2018. REUTERS/Brendan McDermid

STOCKS: Tesla appoints a new chair to replace Elon Musk, Roku tumbles

Tesla (TSLA) appointed current board member Robyn Denholm to replace Elon Musk as the chair of the board. Denholm’s appointment comes in the wake of a settlement between Musk and the SEC, which included terms requiring that Musk step down as chairman of the board for at least three years. Denholm, currently CFO of Australian telecommunications company Telstra, will head the electric car-maker as it faces pressure to improve its balance sheet and deliver on its promise of achieving long-term profitability. Shares of Tesla rose 0.93% to $351.40 each as of market close.

Roku (ROKU) shares slipped despite beating Wall Street’s expectations on the top and bottom lines in its latest earnings report. Revenue came in at $173.4 million versus consensus estimates of $169.1 million, and loss per share was three cents better than expected at 9 cents. Average revenue per user, however, came in weaker than expected, at $17.34 versus $17.44. “Roku again beat expectations, but not as convincingly as it has in the past,” Wedbush Securities analyst Michael Pachter wrote in a note. Shares of Roku fell 22.29% to $45.74 each as of market close.

TripAdvisor (TRIP) shares rallied after the travel company posted earnings that beat Wall Street expectations. Net income was $69 million, or 49 cents per share, versus $25 million, or 18 cents per share from the same period last year. Adjusted earnings came out to 72 cents per share, beating consensus estimates of 47 cents. TripAdvisor’s stock advanced 15.26% to $66.93 per share as of market close.

ECONOMY: New unemployment claims fell slightly last week

The number of Americans filing for unemployment fell last week to 214,000 from 215,000 the week prior, according to the Department of Labor’s latest report. This came in slightly above consensus estimates of 213,000, according to Bloomberg. Continuing jobless claims fell to 1.623 million, below estimates of 1.634 million.

“This is a bit disappointing,” Ian Shepherdson of Pantheon Macroeconomics wrote in a note. “The hit from the hurricanes should by now be fading from the numbers, with claims heading back to the pre-storm trend. We might just be impatient, but if claims don’t subside below 210K very soon, we’ll have to start looking for another explanation for the uptick.”