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| The major U.S. index futures are pointing to a narrowly mixed opening on Wednesday, with sentiment reflecting the nervousness of traders, as the FOMC verdict draws close. The mood in the global markets is mixed, with Asian stocks trading in a tentative manner, while the European averages have gathered some momentum. Domestic corporate news of the day has largely been positive. At the same time, a report released short while ago showed that housing starts rose by less than expected, while building permits unexpectedly fell. However, the market focus is likely to rest on the outcome of the FOMC meeting, and an indication that the Fed is willing to go slow on stimulus trimming could support further buying.
U.S. stocks advanced solidly on Tuesday despite apprehension concerning the outlook for monetary policy. The major averages opened higher and rose steadily in early trading. After trading sideways till the mid-session, the Dow Industrials and the S&P 500 Index legged up slightly and went about another consolidation move, while the Nasdaq Composite continued to advance throughout the session.
The Dow Industrials added 34.95 points or 0.23 percent before closing at 15,530 and the S&P 500 Index rose 7.16 points or 0.42 percent before closing at 1,705, while the Nasdaq Composite outperformed with a 27.85 point or 0.75 percent advance before closing at 3,746.
Nineteen of the thirty Dow components closed higher, with Alcoa , American Express , Boeing , General Electric and Intel leading the advance. On the other hand, UnitedHealth lost 1.08 percent.
Airline, gold, biotechnology, retail and brokerage stocks were among the best performers of the session.
The Dow Industrials reattempted to break through the 15,562 barrier yesterday but pulled back after hitting the level. If the Fed relieves market anxiety concerning stimulus withdrawal, the index could target the level once again. Outside of this level, the index also has resistance around 15,611 and 15,654. On the downside, the index has support around 15,445,15,378, its 50-day MA (currently at 15,291), its 100-day MA (currently at 15,187) and its 21-day MA (currently at 15,047).
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| Housing starts in the U.S. rose by much less than expected in the month of August, according to a report released by the Commerce Department, which also unexpectedly showed a sharp drop in building permits. The report said housing starts rose 0.9 percent to an annual rate of 891,000 in August from the revised July estimate of 883,000.
Economists had expected housing starts to climb to 915,000 from the 896,000 originally reported for the previous month. Meanwhile, building permits, an indicator of future housing demand, tumbled 3.8 percent to an annual rate of 918,000 in August from the revised July rate of 954,000. The drop in building permits came as a surprise to economists, who had expected permits to climb to 950,000 from the 943,000 originally reported for July.
Following the conclusion of its 2-day meeting, the Federal Reserve is due to release its post-meeting policy statement at 2 pm. The Fed is widely expected to keep the fed funds rate unchanged at an extremely accommodative 0-0.25 percent.
At the same time, economists expect the central bank to shed some light on the schedule for stimulus trimming. Simultaneously, the central bank is also expected to release its updated economic forecasts.
Shortly after, Fed Chairman Ben Bernanke will hold a press briefing to give additional clarity to the central bank's views on the economy and monetary policy.
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| Adobe Systems reported third quarter non-GAAP earnings of 32 cents per share on revenues of $995.1 million, down from $1.08 billion in the year ago quarter. The results trailed expectations. In its earnings call, the company issued weak guidance for its fourth quarter.
General Mills' first quarter profit matched analyst expectation, while its revenues topped Street view. The company also backed its annual earnings guidance.
FedEx reported first quarter profit and revenue that improved from the prior year period and topped Wall Street view. The company also backed its fiscal 2014 earnings per share growth guidance of 7 to 13 percent.
Steel Dynamics said it expects third quarter earnings of 21-26 cents per share, with the company stating that it is likely to benefit from higher overall shipments and average metal spread. Analysts currently expect earnings of 26 cents per share for the quarter. The company also said the impact of anticipated losses from its Minnesota operations in the third quarter is about 4 cents per share.
Dollar Tree said its board has authorized the repurchase of up to $2 billion of its common stock.
Apache (APA) announced that it has agreed to sell certain oil and gas producing properties in Canada in two separate deals with a combined value of $112 million.
Arthur J. Gallagher (AJG) announced the acquisition of English risk management and insurance broker Belmont International.
Oracle , Apogee Enterprises , CLARCOR (CLC), Herman Miller and Steelcase (SCS) are among the companies due to release their quarterly results after the close of trading.
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| European Market |
| European stocks started higher only to be engulfed by Fed fears and consequently traded in a volatile manner in early trading. The averages have pared their losses since then and are currently modestly higher.
In corporate news, Spanish fashion retailer Inditex posted higher net income for its first half. Meanwhile, named company insider Ralf Thomas as its new finance chief.
Specialty chemicals firm Lanxess said it plans to achieve about 100 million euros in annual savings from 2015 onwards through efficiency improvements and targeted restructuring. This will lead to about 1,000 job cuts globally by the end of 2015.
The minutes of the September monetary policy meeting of the Bank of England showed that policymakers were unanimous in their decision to maintain interest rates and quantitative easing unchanged. However, members had different views about the extent of monetary policy loosening warranted to support the economy.
A report released by Eurostat showed that construction output in the euro area rose 0.3 percent month-over-month in July following the 0.9 percent increase in June.
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| The major Asian markets traded in a nervous manner ahead of the FOMC decision. The Japanese market ended notably higher, as the Yen retreated and the Chinese market rebounded from the previous session's sharp retreat.
The New Zealand and Singaporean markets also ended higher, while the Australian, Hong Kong, Indonesian, Malaysian and Taiwanese markets retreated. The South Korean market remained closed for a public holiday.
Japan's Nikkei 225 average opened higher and advanced throughout the morning. After giving back some of its gains in the afternoon, the index closed up 193.69 points or 1.35 percent at 14,505.
A majority of stocks advanced, with export stocks seeing particular strength. Pioneer, Sumitomo Mitsui Trust Holdings, Matsui Securities led the index's gains.
Australia's All Ordinaries traded close to the unchanged line amid some volatility until late morning trading. Thereafter, the index retreated till late afternoon trading before trimming some of its losses and closing down 14.80 points or 0.28 percent at 5,230. Energy, healthcare and material stocks were among the worst performers of the session.
Hong Kong's Hang Seng Index closed at 23,118, down 63.07 points or 0.27 percent, while China's Shanghai Composite Index ended up 6.29 points or 0.29 percent at 2,192.
On the economic front, a report released by the China's National Bureau of Statistics showed that house prices in 69 out of 70 cities surveyed by the government rose year-over-year in August.
Westpac and the Melbourne Institute reported that a leading economic indicators index for Australia rose 0.6 percent month-over-month in July following an unchanged reading in June. |
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