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Wall Street Guarded Despite Bank Of Japan Stimulus

Wall Street Guarded Despite Bank Of Japan Stimulus

Although some optimism has dawned after another central bank joined the party in lavishing additional stimulus, Wall Street mood has become muted on Wednesday. The U.S. index futures are currently pointing to a modestly higher opening. The markets have several catalysts, including two housing reports, some corporate earnings and Fed speeches, to give some direction. A decision by the Bank of Japan earlier in the global trading day to augment its stimulus is considered only a symbolic gesture, as the additional asset purchases won't happen before 2013.

As of 6:15 am ET, the Dow futures are adding 18 points, the S&P 500 futures are moving up 2 points and the Nasdaq 100 futures are gaining 6.75 points.

U.S. stocks went about in a lackluster fashion on Tuesday amid the re-ignition of economic concerns and ended on a mixed note.

On the economic front, a report on housing starts and building is slated to be released at 8:30 am ET. Economists estimate housing starts for August to come in at 768,000, while building permits are expected to have slipped to 802,000. In July, housing starts and building permits came in at 746,000 and 754,000, respectively.

The National Association of Realtors is scheduled to release its report on existing home sales for August at 10 am ET. Economists estimate existing home sales of 4.550 million for the month compared to 4.47 million units in July.

Federal Reserve Chairman Ben Bernanke will meet with Senate Finance committee Wednesday to focus on economic policy, fiscal cliff. Kansas City Federal Reserve President Esther George is due to deliver the opening remarks at a Kansas City Fed jobs conference at 9:45 am ET. Additionally, Federal Reserve Bank President Richard Fisher is scheduled to speak to the Harvard Club of New York City on the "Economic and Monetary Policy Outlook" at 7 pm ET.

The Energy Information Administration is scheduled to release its weekly petroleum inventory report for the week ended September 14th at 10:30 AM ET.

In corporate news, Microsoft (MSFT) announced that its board approved a 15 percent increase in its quarterly dividend to 23 cents per share. The company also said Raymond Gilmartin, a former Merck executive and its board member, will not seek re-election at its 2012 annual meeting of shareholders after an 11-year stint.

Goldman Sachs (GS) said its long time CFO David Viniar has decided to retire, effective the end of January 2013, after a 12 year stint in the position. Viniar will join the board as a non-independent direction, while Harvey Schwartz, currently global co-head of the Securities Division, will replace him at the CFO position.

ACE (ACE) announced that it has acquired 80 percent of Indonesian general insurer Asuransi Jaya Proteski.

Newfield Exploration (NFX) announced an agreement to sell its remaining assets in the Gulf of Mexico to W&T Offshore. The company noted that total assets sales made in late 2011, early 2012 and the proposed sale culminated in its exit from the Gulf of the Mexico region, generating proceeds of about $300 million.

AAR Corp. (AIR), Adobe Systems (ADBE), Apogee Enterprises (APOG), Bed Bath & Beyond (BBBY), CLARCOR (CLC), Herman Miller (MLHR) and Steelcase (SCS) are among the companies due to report their quarterly results after the markets close.

The major Asian markets closed higher, capitalizing on the Bank of Japan's decision to bestow the economy with additional stimulus. The Hong Kong and the Japanese markets led the region's gains, while the New Zealand market closed moderately lower. Meanwhile, the Indian market was closed for a public holiday.

Japan's Nikkei 225 average closed up 108.44 points or 1.19 percent at 9,232, the highest closing level since May 2nd, 2012. Australia's All Ordinaries added 22.60 points or 0.51 percent before closing at 4,440. Hong Kong's Hang Seng Index closed at a near-month closing high of 20,842, up 239.98 points or 1.16 percent.

Following the conclusion of its two-day monetary policy meeting, the Bank of Japan announced a 10 trillion yen increase in its asset purchase program to 80 trillion yen, although the purchases will be made only in 2013.

One-half of the increase is meant to purchase T-bills and the remaining half for the purchase of Japanese government bonds. The asset purchase target for 2012 was maintained unchanged. The central bank also did away with the 0.1 percent interest rate floor on its Japanese bond purchases. Meanwhile, the bank maintained the key interest rate unchanged at 0-0.1 percent.

European stocks are rebounding after a 2-day slide, as additional central bank stimulus, this time from the Bank of Japan, warmed the Street. That said, an uneasy optimism prevailed, as the region is left to contend with the sovereign debt crisis.

In corporate news, Spanish retailer Inditex reported higher earnings for its first half, which also came in above estimates by most analysts. Sales rose 17 percent. The company also said sales growth since the end of the first half have accelerated to 17 percent compared to 9 percent in the year-ago period. German tire maker Michelin raised its adjusted earnings guidance for 2015 to 2.9 billion euros from its previous target of 2.5 billion euros.

On the economic front, the minutes of the Bank of England's September monetary policy meeting showed that the decision to retain the key rate unchanged and to maintain unchanged the size of its quantitative easing was unanimous. That said, some committee members perceived the need for more stimulus in due course.

by RTT Staff Writer

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