The major U.S. index futures are pointing to a higher opening on Wednesday following lackluster performance in the previous session. The global markets rallied, as positive data points, including an upward revision to China's GDP growth forecast by the World Bank, encouraged market participants, temporarily alleviating economic worries. That said, a private employment report released earlier in the day showed continuing turmoil in the job market. Wall Street's direction in today's session largely hinges on the Fed decision and the results of the ISM's services survey.
After trading below the unchanged for most of Tuesday's session, ignoring the confidence exuded by deal announcements, the major averages took a diverse path in the afternoon. The lackluster trading witnessed for most of the day reflected caution ahead of the Fed's interest rate decision and apprehension over some key impending first-tier economic reports. The Dow Industrial remained below the unchanged line to close the session down 17.53 points or 0.18% at 9,772.
Meanwhile, the Nasdaq Composite Index and the S&P 500 Index recovered from the steep losses they suffered in the morning and moved into positive territory by the afternoon. After showing some volatility, both the averages closed higher for the session. The Nasdaq rose 8.12 points or 0.40% to 2,057 and the S&P 500 Index advanced 2.53 points or 0.24% to 1,045.
Nineteen of the thirty Dow components ended the session lower, with General Electric (GE), Hewlett-Packard (HPQ), Intel (INTC), Coca Cola (KO), Merck (MRK), Microsoft (MSFT) and Verizon Communication (VZ) posting notable losses. On the other hand, Alcoa (AA), American Express (AXP), Bank of America (BAC) and Caterpillar (CAT) were among the advancers.
Among the sector indexes, the Philadelphia Semiconductor Index fell 1.31%. However, the Dow Jones Transportation Average showed divergence with the Dow and closed 5.28% higher, helped by the Burlington Northern (BNI) deal, and the NYSE Arca Airline Index rose 1.26%. The Dow Jones U.S. Basic Materials Average climbed 1.84%, while the NYSE Arca Oil Index and the Philadelphia Oil Service Index ended up 1.12% and 2.92%, respectively. The NYSE Arca Gold Bugs Index rallied 8.02% compared to a more modest 1.25% gain by the Philadelphia Housing Sector Index. The NYSE Arca Disk Drive Index rose 1.93% and the NYSE Arca Networking Index gained about 1%.
The CBOE Volatility Index, the fear gauge among investors, has broken a short-term uptrend, although on a longer-term basis, the downtrend is still intact. After having broke above its 50-day moving average, the index looks poised to challenge its 200-day moving average, which is currently at 32.6. The index has pulled back slightly after it breached the 30 level last weekend.
On the economic front, the Commerce Department said factory orders rose 0.9% month-over-month in September compared to the 0.8% growth expected by economists. The better than expected reading reflected an upward revision to transportation orders, which are a part of the durable goods category. However, non-defense capital goods orders, excluding aircraft orders, were revised down to show a gain of 1.8% compared with the 2% increase estimated initially.
Meanwhile, auto sales came in at a seasonally adjusted annual rate of 10.4 million units, well ahead of the 8.8 million rate estimated by analysts, suggesting that there is still some life left out in the auto market that was not completely squeezed out by the cash-for-clunkers program.
Fed Statement Under Scanner
The Federal Open Market Committee is scheduled to make an announcement regarding the near-term direction of monetary policy at 2:15 PM ET on Wednesday following the end of its 2-day meeting.
The central bank has limited scope to fiddle around with rates, as the economy is still wobbly despite the strong return to growth in the third quarter. Economists widely expect the Fed to retain interest rates at current record low levels. The focus this time will likely be on whether the FOMC does away with the phrase 'extended period' while referencing its intention to hold rates unchanged, and if it does, it would likely be construed as the Fed positioning
Commerzbank believes that the Fed isn't likely to say anything definite due to the underlying skepticism on economic growth. At the same time, the central bank is unlikely to rush to exit the ultra-expansionary monetary policy due the fact that the underlying inflation pressure remains low and has the potential to dip even lower.
Following its September meeting, the Fed extended the program to purchase $1.45 trillion in mortgage-related securities by a quarter through the end of March 2010, slowing the pace of purchases. With the Fed's program to purchase longer dated securities completed in October, it is unlikely to make any alterations to its asset purchase program.
Currency, Commodity Futures
Crude oil futures are trading up $0.78 at $80.38 a barrel after rising $1.47 to $79.60 a barrel on Tuesday. Gold futures, which rose $30.90 to $1,084.90 an ounce in the previous session, are currently moving up $7.60 at $1,092.50 an ounce. Gold's rally on Tuesday was aided partly by the purchase of 200 metric tons of gold by India from the IMF, intensifying speculation that there may be other takers too.
On the currency front, the U.S. dollar is trading at 90.90 yen compared to the 90.3347 yen it fetched at the close of New York trading on Tuesday. At the same time, the greenback is trading at $1.4786 versus the euro, weaker than the $1.4724 it was worth yesterday.
According to Danske Bank, the peak for the EUR/USD pair is still ahead of us, as dollar-negative factors continue to dominate both in the short and medium terms. The dollar gets hit by rising equities and oil, as the later developments reflect an increase in the risk preference of investors. Additionally, the dollar could be weighed down by negative sentiment generated by the U.S. fiscal deficit and central bank diversification.
Given the possibility that the Fed is unlikely to convey any significant change in its stance, the recent strength in the dollar built on the back of reduced risk appetite may begin to wane.
Asia
Asian stocks rebounded across the board on Wednesday amid bargain hunting and short covering after recent heavy losses. However, the undertone remained cautious as investors looked ahead to the Fed decision.
The Japanese market ended higher, led by resource-related stocks after oil and gold prices climbed. The benchmark Nikkei 225 closed at 9,844, up 41 points or 0.42%. The market was closed on Tuesday for a public holiday.
Sumitomo Metal Mining advanced 2.57%, Mitsubishi Corp rose 1.41% and Marubeni Corp added 3.18%. Japan Steel Works jumped over 10% after the company lifted its full-year profit forecast. Among exporters, Tokyo Electron plunged over 5% and Advantest declined 1.25% after a brokerage cut its rating on the semiconductor industry.
Nissan Motor advanced 1.69% after its U.S sales increased in October. Toyota Motor added 1.12% on reports it is raising its global sales target. In the banking sector, Mitsubishi UFJ Financial Group fell 1.64% and Mizuho Financial Group declined 2.17%, while Sumitomo Mitsui Financial Group ended flat.
The Chinese market extended its uptrend for the fourth session, led by banks and non-ferrous metal producers. The benchmark Shanghai Composite index, which tracks both A and B shares, rose 14 points or 0.46% to 3,129, its highest close since August 13th. The World Bank raised its 2009 growth forecast for China to 8.4% compared to its June forecast for 7.2% growth.
Hong Kong's benchmark Hang Seng index rose 375 points or 1.76% to 21,615, as investors accumulated banking and gold stocks on bargain hunting. Bank of China and China Construction Bank rose around 2.6% each after ending sharply lower in the previous session.
The South Korean market ended a six-day slide on bargain hunting, with the benchmark KOSPI closing at 1,580, up 30 points or 1.94%, led by gains by banks and brokerages. However, volume was moderate at 262.6 million shares worth 3.7 trillion won, indicating weak underlying sentiment. Gainers outnumbered decliners by 541 to 257.
KEB rallied around 8%, KB Financial Group advanced 1.8% and Hana Financial Group gained 1.2% on value buying after its recent losses. Shinhan Financial Group added nearly 3% and Korea Exchange Bank rallied around 8% on better-than-expected third-quarter earnings.
The Australian market finished a volatile session modestly higher, led by miners and banks. Some encouraging economic data on building approvals also helped improve sentiment. The benchmark S&P/ASX 200 closed at 4,540, up 9 points or 0.19% and the broader All Ordinaries index rose 8 points or 0.17% to 4,548.
Europe
The major European markets are advancing on Wednesday after recording losses in the previous session. The French CAC 40 Index and the German DAX Index are rising 1.64% and 1.17%, respectively, while the U.K.'s FTSE 100 Index is advancing 0.83%.
On the economic front, Eurostat reported that eurozone industrial producer prices fell 7.7% year-over-year in September, compared with the 7.5% decline in the previous month. The September price decline came in line with economists' expectations. On a monthly basis, producer prices decreased 0.4% in September in contrast to the 0.5% growth seen in the preceding month.
The results of the services sector survey from the region showed that services activity in the U.K. expanded at a faster rate in October, with the CIPS/Markit Purchasing Managers' Index coming in at 56.9 in October compared with 55.3 in the previous month. In Germany, services activity expanded at a slower rate in October. The business activity index fell to 50.9 in October from 52.1 in September.
Meanwhile, data on the euro zone showed that the final Markit Eurozone composite output index rose to 53 in October from 51.1 in September. The services purchasing managers' index climbed to 52.6 in October, higher than the flash reading of 52.3 and the September reading of 50.9. It was the second consecutive monthly increase in activity and was the strongest gain since December 2007.
U.S. Economic News
Private sector employment continued to decrease in the month of October, according to a report released by Automatic Data Processing, although the pace of job losses slowed for the seventh consecutive month.
The report showed that non-farm private employment fell by 203,000 jobs in October following a revised decrease of 227,000 jobs in September. Economists had expected a loss of 198,000 jobs compared to the decrease of 254,000 jobs originally reported for the previous month.
The ISM is scheduled to release the results of its non-manufacturing survey at 10 AM. The non-manufacturing index is likely to show a reading of 51.5 for October.
In September, activity in the sector expanded for the first time since August 2008. The non-manufacturing index rose to 50.9 in September from 48.4 in August and the business activity index rose 4 points to 55.1, marking the highest reading since October 2007. However, only 5 out of the 18 industries reported growth. The new orders and backlog orders index rose 4.3 points and 10.5 points, respectively to 54.2 and 51.5, while the employment index edged up merely 0.8 points to 44.3.
The Energy Information Administration is scheduled to release its weekly petroleum inventory report for the week ended October 30th at 10:30 AM ET.
Crude oil stockpiles rose by 0.8 million barrels in the week ended October 23rd to 339.9 million barrels, with inventories remaining above the upper boundary of the average range. Gasoline stockpiles rose by 1.7 million barrels, while distillate inventories declined by 2.1 million barrels. Notwithstanding the decline, distillate inventories remained above the upper boundary of the average range. Refinery capacity utilization averaged 82.2% over the four weeks ended October 23rd compared to 82.9% in the previous week.
Earnings
Time Warner (TWX) reported that its third quarter earnings fell to 55 cents per share from 80 cents per share last year. Adjusted earnings from continuing operations were 61 cents per share compared with 65 cents per share in the year-ago period. Revenues fell 5.9% to $7.14 billion, ahead of the $7.08 billion. The company raised its full year earnings estimate to at least $2.05 per share from its earlier estimate of $1.98 per share.
Comcast (CMCSA) said its third quarter earnings adjusted earnings were 28 cents per share, ahead of the 25 cents per share consensus estimate. Revenues rose 3% to $8.802billion, missing the $8.85 billion consensus estimate.
Stocks in Focus
Disney (DIS) may see buying interest after it announced that the Chinese government has approved its application to set up its theme park in Shanghai. The park will reportedly be constructed in the Pudong district at an estimated cost of $3.5 billion. It is expected to be opened in five to six years.
Alaska Air Group (ALK) could see some activity after it announced that its October load factor increased 3.4 percentage points to 77% amid a 1.6% decline in capacity and a 3.2% decline in traffic. United Airlines (UAUA) reported a 2.3 percentage point increase in its consolidation load factor for October to 83.1%.
CB Richard Ellis (CBG) receded in Tuesday's after hours session after announcing that it will sell shares of its Class A common stock for an aggregate offering price of up to $300 million.
Pioneer Natural Resources (PXD) is likely to see some activity after it reported a third quarter net loss attributable to common stockholders of 6 cents per share, including a non-cash unrealized loss on commodity derivatives of 8 cents per share. On an adjusted basis, the company reported earnings of 2 cents per share. Revenues and other income fell to $410 million from $602.89 million in the year-ago period, above the average analysts' estimate of $400.08 million.
Kraft Foods (KFT) could see weakness after it reported that its third quarter earnings declined to 55 cents per share from 91 cents per share in the year-ago period. The year-ago results included a gain of 57 cents per share. Revenues declined 6% to $9.8 billion. The consensus estimates called for earnings of 48 cents per share on revenues of $10.32 billion. The company raised its full year earnings estimate to $1.97 per share from $1.93 per share, while analysts estimate earnings of $1.97 per share.
Unum Group (UNM) may also be in focus after it reported a profit of 66 cents per share for its third quarter, higher than 32 cents per share in the year-ago period. The recent quarter's results included a gain of 2 cents per share compared to a loss of 32 cents per share in the year-ago period. Revenues fell 3% to $2.52 billion. The company affirmed its full year earnings estimate of $2.50-$2.60 per share, while analysts estimate earnings of $2.56 per share.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.