B10 Business The Boston Globe THURSDAY, SEPTEMBER 19, 2019
25THEBOSTONGLOBEIndexof publicly tradedcompaniesin MassachusettsMajor stock indexes closed mostly higher after the Fed cut
its benchmark interest rate a secondtime this year, citing
slowingglobaleconomic growth and trade conflicts. Gains
by banks, utilities, and tech companies outweighed losses
elsewhere. Stocks initially fell as the central bank an-
nounced the widely expected rate cut. Its statement failed
to indicate whether more rate are likely this year, though it
left the door open for moreif the economy weakens. But di-
verging opinions by members of the Fed’s policy committee
left someinvestors feeling uneasy. The divisions at the Fed
underscore the challenges confronting Powell at a time of
uncertainty aboutthe economy. They also fuel doubts
amonginvestors looking for certainty on interest rate poli-
cy. The S&P 500 is eking out modest gainsof 2.2 percent for
the quarter with just weeks left — a pullback from gains of
3.8 percent in the second quarter and 13.1 percent in the
first quarter. Bond prices rose and the yield on the 10-year
Treasury fell to 1.80 percent. A drop in profitweighedon
FedEx; it fell 12.9 percent. Chewy slid 6.1 percent; the pet
store’s quarterly loss was far wider than expected.
MarketsStocks mostly upafter rate cut
DOW JONES industrialaverage
NASDAQComposite index
S&P 500 index
Globe 25index
SOURCE:BloombergNewspropriately to sustain the ex-
pansion.”
The economy is growing at
an annualrate of about 2 per-
cent, above what is estimated to
be maximum sustainable out-
put over the long term, and the
consensusof Fed and private
forecasters is that growthwill
hold near that level through
next year. At suchtimes, the
Fed wouldnormally not be eas-
ing credit, especially withcon-
sumers spending freely.
But the risk of recession is
elevated thanks to the US trade
war with China, slowingecono-
miesin Asia and Europe, and
the prospect of a messy divorce
between Britain and the rest of
the EuropeanUnion.These
threats have prompted the Fed
to cut rates twice sincethe end
of July, a sort of insurance poli-
cy as business investment and
exports weaken.
A split over how to proceed
emerged Wednesday among the
17 voting members of the rate-
setting Federal OpenMarket
Committee. In forecasts re-
leased after their meeting, sev-
en officials indicated that an-
other quarter-point drop in the
benchmark federal funds rate
will be needed this year, while
10 weredivided evenly between
thosewhoexpect rates to re-
mainthe same,and thosewho
thinkrates should be higher.
Lookingto 2020,nine com-
mittee membersforecast rates
at 2 percent or higher, while
eight expected next year woulduFEDERALRESERVE
ContinuedfromPageB 7end with rates at 1.5 percent to
1.75 percent.
Three FOMCofficials dis-
sented on Wednesday’s quarter-
point cut, the first time that has
happened sincePowell took
over as chairman. As they did in
July, Boston Fed president Eric
Rosengrenand Esther George,
his counterpart at the Kansas
City Fed, voted to keep rates un-
changed. Meanwhile, St. Louis
Fed presidentJames Bullard
wanted a half-point cut.
“As long as growth remains
at 2 percent, I don’t see the
needfor policy action,” Rosen-
grensaid in a Sept. 3 speech at
Stonehill College.
WhileRosengren and others
believethereisnoreasonto
panic, President Trumpcontin-
ues to blast the central bankfor
not quicklycutting rates to ze-
ro, a step he thinks wouldsu-
percharge growth.
“Jay Powell and the Federal
Reserve Fail Again. No ‘guts,’ no
sense, no vision! A terrible com-
municator!”he tweeted
Wednesday after the Fed an-
nouncedits move.
An economic slowdown or
recession couldcripple the
president’s reelection cam-
paign. Trump’s position and
rhetoric is extreme; taking rates
to zero quickly would leave theFed no roomto cut whenthe
economy actually starts to slow
down significantly, economists
have said.
But othersbelieve the Fed
should act preemptively by con-
tinuing to ease credit.
“The bondmarket is saying
that more cuts are warranted,”
said Matt Miskin, co-chief in-
vestmentstrategist at John
HancockInvestmentManage-
ment, referring to falling yields
on government bonds,a sign
that investors expect the econo-
my to weaken. “The Fed is
pushing back on that.”
Stocks fell 200 points follow-
ing the release of the Fed’s rate
statement, but they recouped
those losses once Powell con-
cluded his press conference.
The DowJones industrial
average endedthe day up 36
points,or 0.1 percent, to
27,147.The S&P 500 rose less
than0.1 percent. The yieldon
the benchmark 10-year US
Treasury notedippedto 1.777
percentfrom1.805percent on
Tuesday.
The debate over whether the
Fed should be aggressive or
cautious comes down to an as-
sessment of where we are in the
business cycle. Powell has char-
acterized the past two rate cuts
as “mid-cycle” adjustments, abooster shot for an expansion
that still has legs.
Others believe the economy
is in its “late cycle,” or nearing
contraction.
Latecyclescanlastany-
wherefrom a couple of months
to morethan two years, accord-
ing to DirkHofschire, a team
leader of asset allocation re-
search at Fidelity Investments.
He said past mid-cycle easing
has been successful, but not
late-cycle rate cuts.
“The late cycle is a very un-
certain period,” he said.
And investors hate uncer-
tainty. Their main worry: that
the slowdown in business in-
vestment will lead to less hir-
ing, whichwill erodeconsumer
confidence, whichwill push the
economy into a recession. Con-
sumer spending accounts for 70
percent of economicactivity.
Powell has gotten praise in
some quarters for resisting
Trump’s political pressure.
“The Fed remains an inde-
pendentorganization, and they
are taking what they see as nec-
essary actionsto sustain the
economy and prevent us from
going into a recessionin the
nearterm,” saidCindy Kup-
pens, a senior adviser at
O’Brien Wealth Partners in Bos-
ton. “They’ve definitely left the
dooropento further rate cuts.
But right now... their job is to
steer and monitorthe economy
but have leverage to jumpin if
necessary.”Larry Edelman canbe reached
at [email protected].A divided Fed trims borrowing rate“It’s a dream come true to
have the capital to push the
technology to a scalethat’s
unique in the world,” said Kelly,
one of four PhDsfromthe Mas-
sachusetts Institute of Technol-
ogy whofoundedGinkgo in
2008 along witha former MIT
professor.
The venturecapitalfinanc-
ing round is the biggest for any
biotech in the state this year, ac-
cordingto the Massachusetts
Biotechnology Council, a trade
group. BeamTherapeutics, a
Cambridge gene-editing start-
up, had the next-largest round,
at $135 million.
PitchBookreported Monday
that Ginkgo’s latest fund-rais-
ing roundwould be even big-
ger— $311.6 million. Kelly said
that after the report cameout,
Ginkgo stoppedraising money
and decided to announcewhat
it had taken in at that point.
In the past two years, Gink-
go has signed several big deals
that reflect enthusiasm about
its approach. The deals include
one with Toronto-basedCronos
Groupfor $122millionto pro-
ducecultured cannabinoids,
another with the Swiss drug gi-
ant Rochethat’s worth up to
$160million to discover noveluGINKGO
Continued fromPage B7antibiotics, and yet another
with Synlogic, of Cambridge, in
which Ginkgo invested $80 mil-
liontospeed the development
of living medicines.
In 2017, Ginkgo formed a
jointventure with Bayer called
Joyn Bio to create microbes that
can replace or supplementfer-
tilizer for crops.
Last year, Ginkgo spunoff
Motif Foodworks, with$120
millionin funding, to engineer
ingredients for food companies
to make high-protein products,
from veggie burgers to plant-
based yogurt.
And on Monday, Ginkgo an-
nounceda partnership with Y
Combinator, a SiliconValley ac-
celerator, to give startups access
to toolsto make materialsfrom
living things.
“Ginkgo Bioworkswas the
first bio company YC funded,back in summer 2014,which
makes us especially delighted
to announce a new partnership
between YC and Ginkgo,” Jared
Friedman,a partner at Y Com-
binator, wrote this week in a
blog post.
Billing itself as the “organism
company,” Ginkgo custom-de-
signs cells, transforming every-
day yeast and bacteriainto liv-
ing factories that producefla-
vors, scents, and other products.
“Cells are programmable
similar to computers because
they run on digital codein the
formof DNA,” Kelly said in a
statementaccompanying the fi-
nancing announcement.
“Today’s fundraise will allow
us to expandour technology
and continueour driveto bring
biology intoevery physical
goods industry — materials,
clothing, electronics, food,pharmaceuticals, and more.
They are all biotechindustries
but just don’t knowit yet.”
If that sounds grandiose,
Ginkgo is attracting somebig-
name investors.
Amongthe old investors
who decided to pony up again
were Viking Global Investors, a
Greenwich, Conn., hedge fund;
Cascade Investment, the invest-
ment firm ownedby Microsoft
cofounder Bill Gates; and Bail-
lie Gifford, an investment firm
in Edinburgh.
In addition,the latest round
marked the entry of new inves-
tors, including funds handled
by T. RowePrice Associates.
Kelly declinedto specify how
much investors put up.JonathanSaltzman
canbe reached at
[email protected].Ginkgo’svaluationhits $4.8bcordthroughtechniques
knownas neuromodulation
and epidural stimulation; tech-
nologies that use artificial intel-
ligence and robotics; and stem-
cell treatments and otherex-
perimentaltypesof
regenerative medicine.
To lead the new investment
effort, the foundation hiredits
first-ever chief scientificofficer,
the biotechentrepreneur Ethan
Perlstein. Perlstein was previ-
ously CEOof Perlara, a South
San Francisco biotech startup
that worked closely withrare
disease patientadvocacy
groups.Those groups commit-
ted funding to the company’s
research projects — whichwere
designedto producean experi-
mental drugreadyfor clinical
trials — but Perlara couldn’t
make the finances work, and it
shut downthis past winter.
Perlstein, as a result, is well-
acquaintedwithhow risky the
businessof biotechstartups
can be. Asked abouthis new gig
making bets in a commercial
field with a long history of fail-uREEVE
ContinuedfromPageB7ures,Perlstein said he sees risk
as inescapable.“There’s risk in
grant making. There’s risk in
[putting out requests for pro-
posals].There’s risk in doing
nothing. There’s risks in not do-
ing translational work,” he said.
“You can’t eradicate it, but you
can manage it, and you can de-
risk it, so I thinkthat’s just part
of the job.”
There’s also potential for big
reward. The Cystic Fibrosis
Foundation famously spent
years pioneeringa venture phi-
lanthropymodelthat involved
funding Boston biotech Vertex’s
quest to develop treatments for
the disease; in 2015,it cashed
out its royalty rights to Vertex’s
drugKalydecofor $3.3 billion.
Then there’s the big type 1
diabetes foundation JDRF,
which in 2017 launched a fund
to invest in companiesdevelop-
ing treatmentsfor the disease.
Oneof its investments was
Semma Therapeutics, whichis
workingon turningstem cells
into insulin factories.Just this
month, Vertex acquired Semma
in a $950milliondealthat
JDRFsaid wouldbring it a “sig-nificant return on its invest-
ment” that it wouldplowback
into more investments.(Sean
Doherty, the executivechairof
JDRF’s investment fund, said
he couldn’t disclose the size of
the return on the Semma deal.)
The Reeve Foundation, for
its part, has only once before in-
vested in a company. That was
a few years ago, when it invest-
ed about$3 million in Southern
California-based NeuroRecov-
ery Technologies,whichis
working on neuromodulation
technologies.
Wilderotter said the goal is
to make many moreinvest-
mentslike that one. He said
that he and the foundation’s
leadersdecidedto transform
theirmodelafter studyingthe
impact of othernonprofits,
most notably the Cystic Fibro-
sis Foundation,that have
turned to venture philanthropy.
They were moved, too, he said,
by a sense that fundingonly
early stage academicresearch
didn’t do enough to advance
Christopher Reeve’s fiercead-
vocacy on behalf of peoplewith
spinal-cord injuries.“We felt we neededto
change our approach,” Wil-
derotter said. Whilethe foun-
dation will continue to fundba-
sic research as well as care for
people living with spinal-cord
injuries, investing in compa-
nies working on potential cures
“is our priority,” he said.
The Reeve Foundation has
poured about$140million into
basicresearch,mainlyfunding
scientists at universities and
nonprofitresearchinstitutions,
since1982.(It was founded
then, long before Christopher
Reeve got involved, undera dif-
ferent name.)
Most of that funding has
beendoledout sinceReeve,
who was paralyzed in 1995,
lent his celebrity to create the
foundation that exists today. He
died at age 52 in 2004 of com-
plications from a bed sore, and
his widow, the actress and sing-
er DanaReeve, died at age 44 in
2006 after beingdiagnosed
with lung cancer.RebeccaRobbinscanbe reached
at
[email protected]
.Reeve Foundationseeksto start fundto invest in researchfirmsPAT GREENHOUSE/GLOBE STAFF/FILE 2017
A GinkgoBioworksengineerwasat workin oneof theBostoncompany’s labs.ECONOMIST UNDERFIREJerome Powell(left) has gottenpraise forresisting PresidentTrump’spolitical pressure.