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Wall Street's Fed Optimism Lingers Ahead Of Risk Events

Wall Street's Fed Optimism Lingers Ahead Of Risk Events

The Fed optimism is seen lingering, as reflected by the U.S. index futures, which are pointing to a modestly higher open. The Fed's bold move of announcing an additional QE measure may leave traders emboldened. That said, fundamental concerns may now be the focus. Therefore, traders are likely to focus on some key first-tier economic reports such as the retail sales and industrial production report to gain clarity on the economic outlook.

As of 6:30 am ET, the Dow futures are moving up 52 points, the S&P 500 futures are adding 5.70 points and the Nasdaq 100 futures are moving up 14.50 points.

The Fed delivered in line with expectations, sending large-scale exodus into risky bets on Thursday. U.S. stocks participated in the rally and ended notably higher.

On the economic front, retail sales of food and retail companies with one or more establishments that sell merchandise and associated services to final consumers are slated to be released at 8:30 am ET. For August, economists estimate a 0.8 percent increase each in retail sales and excluding autos sales. In July, retail sales were up

The consumer price index for August is scheduled to be released at 8:30 am ET. Economists expect the headline index to have risen by 0.6 percent and the core reading by 0.2 percent. In July, consumer prices remained unchanged.

The Federal Reserve's industrial production report is due out at 9:15 am ET. Economists estimate a 0.1 percent drop in the industrial production performance for August, while manufacturing output is estimated to have increased by 0.2 percent. Capacity utilization may have edged down by 0.2 points at 79.2 percent. In July, industrial output rose 0.6 percent.

The preliminary report of the Reuters/University of Michigan's consumer sentiment survey for September is scheduled to be released at 9.55 am ET. The consumer sentiment index is expected to have edged down to 73.5 from 74.3 in the previous month.

The Commerce Department is scheduled to release its business inventories report for July at 10 am ET. The report is expected to show a 0.5 percent increase in business inventories for the month.

Atlanta Federal Reserve Bank President Dennis Lockhart is scheduled to deliver welcoming remarks to the Bank's Center for Human Capital Studies conference on "employment Consequences of the Great Recession" at 1 pm ET.

In corporate news, Teva Industries (TEVA) and Bayer Healthcare announced a deal under which Bayer would buy the U.S.-based animal business health business of Teva for up to $145 million, including an upfront of $60 million plus an $85 million in milestone payments.

Western Digital (WDC) said at its investor day that it now expects first quarter revenues of about $3.9 billion to $4 billion down from its previous guidance of $4.2 billion to $4.3 billion. The company attributed the anticipated forecast to muted demand and inventory rebalancing, hurting hard drive demand. That said, the company reiterated its fully year non-GAAP earnings guidance of $10 per share. The company also unveiled a capital allocation program that included the adoption of a cash dividend by its board and an increase in its share repurchase program by $1.5 billion.

Akamai (AKAM) announced it has acquired content acceleration software provider FastSoft in a cash transaction.

The Asian markets reverberated the optimism relayed by the Fed decision to offer stimulatory support and advanced strongly. The South Korean market led the gains in the region, with the key average of the nation advancing close to 3 percent.

Japan's Nikkei 225 average closed up 164.24 points or 1.83 percent at 9,159, closing above the key '9,000' level for the first time since August 29th.

Resource stocks led the rally, with Sumitomo Metal Mining, Mitsubishi Materials and Pacific Metals among the leading gainers of the session. On the other hand, utilities, bank and pharma stocks retreated.

Australia's All Ordinaries opened higher and rose sharply in early trading. The index moved sideways thereafter, closing up 50.40 points or 1.18 percent at 4,410. Material and energy stocks rallied strongly, while defensive stocks came under selling pressure.

Hong Kong's Hang Seng Index closed at 20,630, up 582.15 points or 2.90 percent.

On the economic front, Japan's Cabinet Office said in its monthly report that the economic recovery appears to be pausing due to deceleration of the world economic activity. The report noted that both industrial production and exports are in a weak tone. Private consumption is almost flat with some weak movements seen of late.

Meanwhile, S&P raised its foreign- and local-currency long-term credit ratings on the Republic of Korea to A+/AA- from A/A+ with a 'stable' outlook. The agency also upgraded the local-currency short term rating to A-1+ from A-1 and affirmed its foreign-currency short-term ratings at A-1. The revision was attributed to waning geopolitical threats on the Korean peninsula amid stable political conditions in North Korea.

European stocks are also trading sharply higher, capitalizing on the Fed decision.

by RTT Staff Writer

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