Sentiment on Wall Street has become shaky, as traders pause after the past week's rally that came on the back of an announcement concerning ECB bond buying. Domestic economic data has largely been mixed. This coupled with the 'Operation Twist' program that is yet to run its course may deter the Fed from announcing an outright QE III program. That said, the markets expect the Federal Reserve Chairman Ben Bernanke to take some concrete action to keep the economy from going down the drain.
As of 6:30 am ET, the Dow futures are slipping 14 points, the S&P 500 futures are moving down 2.60 points and the Nasdaq 100 futures are declining 4.75 points.
U.S. stocks reversed course in the week ended September 7th, benefiting from European Central Bank action and also hopes of Fed action. For the week ended September 17th, the Dow Industrials added 1.65 percent, while the S&P 500 Index gained 2.22 percent and the Nasdaq Composite moved up 2.27 percent.
The FOMC meeting takes the center stage in the unfolding week, as traders look ahead to Bernanke to emulate his counterpart at the European Central Bank. Traders may also watch the Commerce Department's retail sales report for August, the Federal Reserve's industrial production report for August, the weekly jobless claims report and the results of a consumer sentiment survey for September by Reuters and the University of Michigan.
The Federal Reserve's consumer credit report for July, the Commerce Department's trade balance report for July, the Labor Department's import and export price indexes for August, the Labor Department's producer and consumer price inflation reports for August and a couple of Fed speeches may also draw some attention. The Commerce Department's wholesale and business inventories reports for July, the Treasury Budget for August and Treasury auctions of 3-year and 10-year notes and 30-year bonds round up the economic events of the week.
The U.S. Federal Reserve is scheduled to release its monthly consumer credit report at 3 pm ET. Consumer credit for July is expected to show an increase of $9.8 billion compared to a $6.5 billion increase in June.
In corporate news, NYSE Euronext (NYX) said its trading volumes declined both year-over-year and month-over-month in August due to a decrease in volatility and the seasonally slower summer period.
Transocean (RIG) said it has reached definitive agreements to sell 38 shallow water drilling rigs to Shelf Drilling International Holdings for $1.05 billion. The company expects to record a non-cash charge in its third quarter related to the transaction. Separately, the company announced that Esa lkaheimonen will succeed Gregory Cauthen as its CFO on November 15th, 2012.
Infosys (INFY) announced a deal to buy Swiss management consultancy firm Lodestone for 330 million francs in cash.
Casey's General (CASY) and Shuffle Master (SHFL) are among the companies due to report their quarterly results after the markets close.
The major Asian markets showed lackluster sentiment amid caution ahead of the FOMC decision. Soft regional economic data also led to indecision among traders. Japan's Nikkei 225 average languished below the unchanged line for much of the session before closing down 2.28 points or 0.03 percent at 8,869. Australia's All Ordinaries opened higher, but it gave back all its gains by the mid-session following volatile added 9.20 points or 0.21 percent before closing at 4,358. Hong Kong's Hang Seng closed at 19,827, up 25.01 points or 0.13 percent.
On the economic front, a slew of economic data released from China over the weekend showed that growth slowed along with a pick up in inflation in August. The annual consumer price inflation rose to 2 percent in August from 1.8 percent in July, although the increase was in line with expectations.
At the same time, industrial output rose 8.9 percent year-over-year in August, the smallest increase since May 2009 and lower than July's 9.2 percent increase. A separate report released today showed that China's trade surplus swelled to $26.66 billion compared to the $19.5 billion surplus expected by economists. Exports as well as imports rose at a slower than expected year-over-year rate of 2.7 percent and 2.6 percent year-over-year.
Revised GDP estimates released by Japan's Cabinet Office showed that Japan's second quarter sequential growth was at 0.2 percent, slower than the 0.3 percent growth estimated initially. The year-over-year growth estimate was also trimmed to 0.7 percent from the preliminary reading of 1.4 percent.
European stocks are showing a lack of direction and are currently trading on a mixed note. All eyes will be on the German Federal constitutional court, which will vote on the decision to suspend the 500 billion euro-ESM on Wednesday. In Greece, the reform measures mandatory for securing continued financing from the Troika seems to have run into rough weather, as Greek Prime Minister Antonis Samaras hasn't got the backing for budgetary cuts.
On the economic front, the Bank of France said it expects the French economy to contract 0.1 percent in the third quarter. The bank's business sentiment index for France compiled based on a survey rose 3 points to 93 in July compared to expectations of 91. A INSEE report showed that French industrial output rose 0.2 percent month-over-month in July, belying expectations for a 0.6 percent increase.
by RTT Staff Writer
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