What’s moving markets today: December 11, 2019

Lululemon’s (LULU) stock dropped 4% after trading hours Wednesday, despite posting strong growth in the business.

Sales at stores open at least a year increased 10% during Lululemon’s most recent quarter compared with the same period a year. The company also grew its profit by 24% compared with a year prior.

But investors expected a stronger outlook from Lululemon and sold off shares of the company.

Lululemon reported double-digit increases during the quarter in both its men’s and women’s divisions, including a 38% increase in its fast-growing men’s unit.

“Part of Lululemon’s success comes from it leaning more heavily into areas where it is less developed. One aspect of this comes from the menswear business,” said Neil Saunders, managing director at GlobalData Retail.

Lululemon’s stock is one of the hottest stocks in retail, increasing 92% this year.

The market finished the day slightly higher after the Federal Reserve left interest rates steady. The move was expected and Fed chair Jerome Powell stressed in a press conference that the US economy remains in relatively good shape.

The Fed also signaled that rates are likely to stay at current levels throughout 2020.

The Federal Reserve held interest rates steady at its December meeting, halting a series of rate cuts that lifted markets and countered recession fears amid ongoing trade uncertainty.

Policymakers unanimously agreed to leave rates hovering between 1.5% and 1.75%, describing the policy decision as “appropriate” to help prolong the nation’s economic expansion, now in its 11th year.

The widely anticipated move falls in line with market expectations as the Fed has signaled it plans to move into an extended pause as it watches to see how the US economy evolves.

Read more here.

The overnight lending market freakout has been solved, after the Fed started injecting billions of dollars to keep the markets steady. Right?

Not so fast.

“We have seen the riskiest form of junk bonds refuse to come back in line with what the rest of the stock market and money managers are doing,” said Danielle DiMartino Booth, CEO and chief strategist of Quill Intelligence, on CNN Business’ “Markets Now” live show.

“That suggests investors see risk in the market, and that’s the big worry for 2020 that keeps Jay Powell up at nightl,” she said.

Netflix CEO Reed Hastings has said no ads will ever appear on his company’s platform. Buuuuut, Disney+ is starting to capture attention, and it might be time to lower Netflix’s prices, CNN Business’ Paul R. La Monica said on CNN Business “Markets Now” live show.

Netflix’s subscriber growth for US has slowed.

“Maybe ads would add interest with lower prices,” La Monica suggested, citing a report from Needham analyst Laura Martin this week.

La Monica also noted Apple is the strongest stock in the Dow this year. But can it continue its streak? People are excited about a 5G iPhone, but “whether the iPhone can come back and create revenue on the device side, that remains to be seen.”

If you want to get out of FAANG altogether, La Monica recommended financials – the Fed could lower rates next year, boosting banks and lowering bond yields.

It’s Fed day, and the markets are quiet. But Peter Tuchman, floor trader at Quattro Securities, said traders are waiting for the Fed’s signals about where the economy is going in 2020.

On CNN Business’ “Markets Now” live show, Tuchman told Alison Kosik that there’s a 99% probability the Fed will not lower rates further on Wednesday. The market could gyrate a bit after the Fed’s announcement comes out, but that won’t have a longterm effect on stocks.

“I think we’re going to see a bob and weave,” Tuchman said. “We’re in a chokehold over the tariffs. There are so many unkowns yet the market trades higher.”

Peloton “wife” Monica Ruiz may need to drink more of Ryan Reynolds’ Aviation gin if she’s got any money tied up in Peloton stock.

Shares of Peloton (PTON) fell another 3% Wednesday after plunging nearly 6% Tuesday following a super bearish report on the company by noted short seller Andrew Left of Citron Research.

Peloton’s stock, currently hovering around $32, is still above its IPO price of $29. But it’s now about 15% below the peak of about $37 that it hit earlier this month.

I talked about the Citron report and the stock with Julia Chatterley on CNNi’s First Move. Warning. Puns about bicycles follow.

GameStop (GME) shares plunged around 20% in early trading Wednesday following a dismal earnings report from the struggling gaming retailer.

The company forecasts that same-store sales will decline in the “high-teens” for the remainder of the year. GameStop’s quarterly sales sunk nearly 26% to $1.4 billion.

The stock is down 60% for the year.

The retail landscape is definitely one of haves and have-nots. American Eagle Outfitters (AEO) is in the latter category.

Shares fell 7% Wednesday after the company cut its outlook for the holiday quarter. The company said softer demand for some of its apparel led to higher markdowns.

Although the company owns aerie, the increasingly popular lingerie and intimate apparel chain that has been a thorn in the side of L Brands (LB) and its Victoria’s Secret brand, that hasn’t been enough to offset broader weakness that has dragged down American Eagle and other mall-based retailers like The Children’s Place (PLCE).

American Eagle shares are now down more than 25% this year.

AT&T, the owner of CNN, took on a lot more debt when it completed its deal to acquire Time Warner in 2018. But Ma Bell president and chief operating officer John Stankey is confident that the telecom and media giant will be able to soon trim some of that burdensome load.

Stankey told investors at a UBS conference late Tuesday that AT&T plans to retire all of the debt it incurred as part of the Time Warner deal by the end of 2022. He added that this could lead to an upgrade for its bond ratings.

It’s going to be a delicate balance for AT&T though. Stankey – who is also CEO of WarnerMedia, the new name for the company that is the parent of CNN, HBO, WarnerBros and other old Time Warner businesses – said more cost cuts and asset sales are likely in order to reduce leverage.

He specifically said the company could sell some of its regional sports networks, real estate and more wireless towers. At the same time, AT&T plans to spend more on content as the HBO Max streaming service launches next year.

But Wall Street likes what it’s heard so far. Shares of AT&T (T) were up slightly Wednesday and have now gained nearly 35% this year. That’s better than the broader market as well as key rivals Verizon (VZ) and Comcast (CMCSA).