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Markets Seeking To Overcome Self Doubts As Fed Verdict Nears

The major U.S. index futures are pointing to a higher opening on Wednesday, with sentiment seeing a lift from expectations that FOMC policy statement will relay the Fed's commitment to persist with its ultra loose monetary policy and other policy tools to combat the slowdown in growth. Earnings news is also offering some encouragement. Meanwhile, the Cypriot bailout concerns linger, as the nation's parliament rejected the bank tax plan and efforts are on to evolve an alternative to help secure an international bailout. A rebound may be on the cards, given the lackluster sentiment seen in the past three sessions, although the FOMC outcome could have an impact on the market movement.

U.S. stocks moved about in a lackluster manner on Tuesday amid apprehensions concerning the Fed decision and the Cypriot bailout plans before ending mixed. The major averages opened higher after a Commerce Department report showed that housing starts rose in February. After holding above the unchanged line until late morning trading, the indexes lost ground and fell sharply till late afternoon trading. Thereafter, the averages pared some of their losses before closing mixed, as news trickled in that the Cypriot parliament voted against the bank tax bill.

The Dow Industrials ended up 3.76 points or 0.03 percent at 14,456, while the S&P 500 Index fell 3.76 points or 0.24 percent before closing at 1,548 and the Nasdaq Composite closed 8.49 points or 0.26 percent lower at 3,229.

Sixteen of the thirty Dow components closed higher, while the remaining fourteen stocks declined. Bank of America (BAC), Hewlett-Packard (HPQ), Coca-Cola (KO) and Procter & Gamble (PG) were among the best performers of the session, while Caterpillar (CAT), Disney (DIS), American Express (AXP) and Alcoa (AA) retreated sharply.

Airline stocks advanced strongly, while oil service and steel stocks came under selling pressure.

On the economic front, housing starts rose 0.8 percent month-over-month to a seasonally adjusted annualized rate of 917,000 units in February. The previous two months' readings were upwardly revised. Single-family and multiple starts both rose in the month. Building permits, considered an indicator of future housing activity, rose 2.7 percent to a 4-1/2 year high of 946,000 units.

Currency, Commodity Markets

Crude oil futures are rising $0.84 to $93.36 a barrel after slipping $1.58 to $92.16 a barrel on Tuesday. An ounce of gold is currently trading at $1,607.50, down $3.80 from the previous session's close of $1,611.30. On Tuesday, gold added $6.70.

Among currencies, the U.S. dollar is trading at 95.61 yen compared to the 95.14 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.2942compared to yesterday's $1.2883.

Asia

The Asian markets closed mixed, with the Chinese, Hong Kong, Malaysian, Indonesian and New Zealand markets advancing, while the Indian, South Korean, Singaporean and Taiwanese markets fell. The Japanese market was closed for a public holiday. With the Cypriot bank tax proposal now voted down, uncertainty concerning a bailout package for the beleaguered nation increased, creating indecision among traders.

China's Shanghai Composite rallied 59.94 points or 2.66 percent before closing at a 2-week high of 2,317. Hong Kong's Hang Seng Index closed up 214.58 points or 0.97 percent at 22,256.

Meanwhile, Australia's All Ordinaries languished below the unchanged line throughout the session before closing down 21.80 points or 0.44 percent at 4,983. Energy, material and healthcare stocks were the worst performers of the session, while financial stocks also saw modest weakness.

On the economic front, a leading economic indicators index for Australia compiled by Westpac and the Melbourne Institute rose to 288.2 in January from 287.3 in December. Two of the four components recorded improvements during the month.

Europe

European stocks are rebounding after a 3-session slide on some profit taking amid the developments in Cyprus and ahead of the FOMC meeting.

In corporate news, German retailer Metro AG reported a decline in its full year profits and also forecast a drop in operating profit for the nine months ending September. Deutsche Bank cut its previously reported profit for 2012, as it increased its legal reserves by 33 percent to 2.4 billion euros.

A report released by the German Federal Statistical Office showed that producer prices rose 1.2 percent year-over-year in February compared to the 1.7 percent increase in January. Economists had expected an inflation rate of 1.5 percent.

Current account balance data released by Eurostat showed a surplus of 14.8 billion euros for January, down from 16 billion euros in December.

The minutes of the Bank of England's March meeting showed that policymakers voted unanimously to hold rates at 0.50 percent, while they split by a 6-3 margin to maintain the bank's 375 million pound bond buying program. A report released by the U.K. Office for National Statistics showed that the U.K.'s claimant count for February fell 1,500 compared to expectations for a drop of 5,000.

U.S. Economic Reports

Following the conclusion of a 2-day meeting, the FOMC will release its post-meeting policy statement at 2 pm ET. Around the same time, the Fed will also release its updated economic forecasts. At 2:30 pm ET, Federal Reserve Chairman Ben Bernanke is scheduled to address a press briefing to explain the Fed decision.

The central bank is unlikely to make any changes to its policy at the meeting, with the central bank expected to continue its long-term securities purchase at a pace of $85 billion per month.

The Energy Information Administration will release its oil inventory report for the week ended March 15th at 10:30 am ET.

Crude oil stockpiles rose by 2.6 million barrels to 384 million barrels in the week ended March 8th. Inventories were well above the upper limit of the average range.

Distillate stockpiles edged up by 0.1 million barrels yet were in the lower half of the average range. Meanwhile, gasoline inventories fell by 3.6 million barrels and were in the middle of the average range.

Refinery capacity utilization averaged 82.8 percent over the four weeks ended March 8th compared to 83.5 percent over the four weeks ended March 1st.

Stocks in Focus

Adobe Systems (ADBE) reported first quarter non-GAAP earnings of 35 cents per share on revenues of $1.008 billion. The results exceeded estimates.

AAR (AIR) reported third quarter earnings of 46 cents per share on sales of $520.2 million. The company increased its full year earnings guidance to $1.78-$1.82 per share, while it expects revenues of about $2.15 billion. The results exceeded estimates and the guidance was positive.

Williams-Sonoma (WSM) reported fourth quarter earnings of $1.34 per share, up 15 percent year-over-year, while its net revenues rose to $1.406 billion from $1.268 billion in the year-ago period. The company also announced a new 3-year $750 million stock buyback program as well as a 41 percent increase in its quarterly dividend to 31 cents per share. For 2013, the company expects earnings of $2.65-$2.75 per share on net revenues of $4.20 billion to $4.28 billion. The results exceeded estimates and the guidance was upbeat.

Cintas (CTAS) reported third quarter earnings of 60 cents per share, higher than 58 cents per share last year. Revenues rose 6.3 percent to $1.08 billion. The earnings were below estimates, while the revenues exceeded expectations. The company updated its 2013 guidance and now expects earnings of $2.50-$2.54 per share on revenues of $4.3 billion to 44.325 billion. The earnings guidance trailed expectations, while the revenue guidance was above expectations.

First Niagara (FNFG) announced the appointment of Gary Crosby as its interim CEO following the mutually agreed upon departure of John Koelmel as its president, CEO and board member, effective immediately.

UDR (UDR) said its board approved a 7 percent increase in its 2013 annualized dividend to 94 cents per share. Regions Financial (RF) said its board authorized an equity purchase for up to $350 million of its common stock.

True Religion (TRLG) announced the resignation of its founder, Chairman and CEO Jeff Lubell, with its board appointing the company's president Lynne Koplin as its interim CEO.

Parkway (PKY) said it has priced its previously announced public offering of 11 million shares at $17.25 per share. The company expects net proceeds of $181.8 million from the offering.

Patterson Companies (PDCO) said its board approved a new share repurchase authorization plan to buy back up to 25 million shares. The board also approved a 14 percent increase in its quarterly dividend to 16 cents per share.

Oracle (ORCL), CLARCOR (CLC), Guess? (GES), Herman Miller (MLHR), Jabil Circuit (JBL) and Pacific Sunwear (PSUN) are among the companies due to release their quarterly results after the close of trading.

by RTT Staff Writer

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