The major U.S. index futures are pointing to a lower opening on Thursday, with sentiment wavering ahead of the key FOMC meeting, where Fed Chairman Ben Bernanke is expected to announce some policy action to tackle the setback the economy is left to contend with. If the Fed delivers below expectations, traders may prefer to take some money off the tables. Even if expectations or met or exceeded, some post-decision unwinding could be expected. An economic report released earlier in the day showed a bigger than expected increase in first time claims for unemployment benefits, underscoring the underlying softness of the economy.
U.S. stocks managed to end Wednesday's session higher amid optimism concerning the resolution of the eurozone debt crisis and uncertainty regarding further Fed stimulus.
The major averages opened higher following the ruling by the German constitutional court approving Germany's participation in the eurozone bailout fund. Thereafter, stocks went about a volatile ride, although they held mostly above the unchanged line, and ended the day modestly higher.
The Dow Industrials ended up 9.99 points or 0.07 percent at 13,333 and the S&P 500 Index closed 3 points or 0.21 percent higher at 1,437. Meanwhile, the Nasdaq Composite added 9.79 points or 0.32 percent to close at 3,114.
Eighteen of the thirty Dow components closed higher, with General Electric (GE) and Verizon (VZ) leading the Dow's advance. On the other hand, DuPont (DD) fell 1.61 percent.
Housing stocks rallied strongly, while airline and brokerage stocks also found some buying interest.
On the economic front, the Commerce Department reported that wholesale inventories at the end of July were up 0.7 percent. Inventories rose 5.3 percent from the year-ago period. At the same time, wholesale sales edged down 0.1 percent month-over-month, but rose 2.7 percent year-over-year. The wholesale inventories to sales ratio came in at 1.21 compared to 1.18 in July of last year.
Currency, Commodity Markets
Crude oil futures are edging up $0.36 to $97.37 a barrel after slipping $0.16 to $97.01 a barrel on Wednesday.
The previous session's retreat came amid the release of the inventory report, which showed that crude oil stockpiles rose by 2 million barrels to 359.1 million barrels in the week ended September 7th. Inventories were above the upper limit of the average range for this time of the year.
Distillate stockpiles rose by 1.5 million barrels yet remained below the lower limit of the average range. Meanwhile, gasoline inventories fell by 1.2 million barrels and were in the lower half of the average range. Refinery capacity utilization averaged 88.3 percent over the four weeks ended September 7th compared to 90.3 percent over the previous four weeks.
Gold futures, which fell $2.90 to $1,736.60 an ounce in the previous session, are currently adding $0.30 to $1,734 an ounce.
Among currencies, the U.S. dollar is trading at 77.63 yen compared to the 77.85 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.2907 compared to yesterday's $1.2900.
Asian markets traded in a lackluster manner amid trepidation about the Fed decision, which is due later in the global trading day. The Australian, Chinese, Hong Kong, New Zealand and Singaporean markets closed lower, while the Japanese, Taiwanese, South Korean, Indian, Indonesian and Malaysian markets ended in positive territory.
After opening lower and spending morning trading below the unchanged line, Japan's Nikkei 225 average recovered, moving above the unchanged line in early afternoon trading. Thereafter the average hovered in positive territory before closing up 35.19 points or 0.39 percent at 8,995.
Electric utilities advanced strongly, with Kansai Electric Power and Chubu Electric Power rising 9.26 percent and 5.47 percent, respectively. Mitsui, Kawasaki Kisen, Nippon Sheet, Nippon Sheet Electric, Nippon Yusen and Nippon Paper were among the other notable gainers.
Meanwhile, Australia's All Ordinaries languished in negative territory throughout the session before closing down 23.30 points or 0.53 percent at 4,360. The majority of stocks declined, with healthcare stocks coming under significant selling pressure.
Hong Kong's Hang Seng Index closed at 20,048, down 27.76 points or 0.14 percent.
On the economic front, the Reserve Bank of New Zealand opted to hold its official cash rate unchanged at 2.50 percent at its September meeting. The bank noted that the economic outlook is broadly consistent with its assessment in June, while it expects inflation to settle near the mid-point of the central bank's target over the medium term.
European stocks are trading mixed after ending on a mixed note on Wednesday. The apprehensive mood reflected the nervousness of traders over whether the central bank-led by Bernanke will deliver in line with expectations.
In corporate news, BAE Systems confirmed that it is in talks to merge with EADS. If the deal materializes, BAE shareholders would own 40 percent of the combined company, while EADS would own the remaining 60 percent stake.
ASML Holdings (ASML) said it has issued shares for two of the three participating customers in its customer co-investment program, issuing a total of 75.57 million shares. Intel (INTC) is being issued 62.98 million shares compared to 12.60 million shares for Samsung. The issuance of shares resulted in aggregate proceeds of 3.016 billion euros.
U.K. clothing retailer Next conceded that sales slowed in August and September after it reported 10 percent growth in first-half profits and 4.8 percent revenue growth. The company also announced an increase in its interim dividend to 31 pence.
Home Retail said its full year benchmark profits would come in line with expectations despite comparable store sales at Homebase slipping 6.2 percent in the 26 weeks ended September 1st. Sales at Arogs were up 0.6 percent.
The Swiss National Bank decided to leave the cap on the franc exchange rate intact at 1.20 francs per euro and the key interest rate at 0%-0.25%, as widely expected. According to the SNB, the Swiss franc is still overvalued and is weighing on economic activity.
U.S. Economic Reports
First-time claims for U.S. unemployment benefits rose by more than expected in the week ended September 8th, according to a report released by the Labor Department on Thursday, with the data pointing to continued sluggishness in the labor market.
The report showed that initial jobless claims rose to 382,000 from the previous week's revised figure of 367,000. Economists had been expecting jobless claims to edge up to 370,000 from the 365,000 originally reported for the previous week.
With energy prices showing a substantial rebound in the month of August, the Labor Department released a report showing that U.S. producer prices rose by more than expected during the month.
The Labor Department said its producer price index surged up by 1.7 percent in August following a 0.3 percent increase in July. Economists had expected the index to increase by 1.4 percent. Excluding the jump in energy prices as well as a notable increase in food prices, the core producer price index edged up by 0.2 percent in August after rising by 0.4 percent in July. The modest increase in core prices came in line with economist estimates
The Federal Open Market Committee, the monetary policy-setting arm of the Federal Reserve, is due to release the post-meeting policy statement at 12:30 am ET, followed by the release of the FOMC forecasts at 2 pm ET. Chairman Ben Bernanke will hold a press briefing at 2:15 pm ET.
At the July 31st-August 1st meeting, the FOMC did not announce any radical measures despite the economic struggles. The meeting's statement showed that the Fed's assessment of economic conditions worsened. The August statement acknowledged the deceleration in economic activity when compared to the first half of the year. The Fed's commentary and outlook on other segments such as the job market, inflation and consumer spending were the same as at the previous meeting.
While maintaining interest rates at 0-0.25 percent and voicing its opinion of the need to maintain the extremely accommodative monetary policy environment at least through late 2014, the committee said it will closely watch incoming information on economic and financial developments.
Federal Reserve Governor Sara Bloom Raskin is due to speak at the 67th Annual National Conference on Citizenship on "Exploring the Link Between Civic Engagement and Employment" in Philadelphia at 1:45 pm ET.
The Treasury Budget, a monthly account of the surplus or deficit of the federal government, is due to be released at 2 PM ET. The budget is considered an indicator of budgetary trends and the thrust of fiscal policy. Economists expect a deficit of $160 billion for August compared to a deficit of $69.6 billion for July.
Stocks in Focus
Pall Corp. (PLL) reported fourth quarter pro forma earnings from continuing operations of 86 cents per share compared to 65 cents per share last year. Sales rose to $722.4 million, up 1 percent year-over-year. The results exceeded estimates. While cautioning of challenges in its European industrial markets, moderating growth in some emerging markets and softness in its semiconductor end markets, the company said it expects earnings of $3.05-$3.25 per share for 2013 on low to mid-single digit local currency sales growth. The earnings guidance surrounded the consensus estimate.
Verizon (VZ) and AT&T (T) separately announced that both companies would offer the iPhone 5 on their networks, beginning September 21st. The companies said that customers can pre-order the gadget online beginning September 14th.
CSC (CSC) said the U.S. Army Communications-Electronics Command has awarded the company a task order to provide worldwide logistics support, with the order estimated to have a 2-year value of $220 million.
DST Systems (DST) announced the appointment of Stephen Hooley to the position of CEO following the decision by the incumbent Thomas McDonnell to retire on December 31st, 2012.
Royal Caribbean (RCL) said its board has approved an increase of its quarterly dividend to 12 cents per share.
NiSource (NI) said at its investor day that it has investment opportunities that would result in capital investments totaling $1.5 billion to $1.8 billion per year, generating 5-7 percent operating earnings growth per year.
Sotheby's (BID) said it had filed an automatic shelf registration statement on Form S-3 ASR with the SEC, which became effective upon filing with the SEC.
Pfizer (PFE) forged an alliance with China's Zhejiang Hisun Pharma for manufacturing and commercializing off-patent pharma products in China and global markets.
by RTT Staff Writer
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