The S&P 500 and Nasdaq are near their best levels since this morning, but the Dow is at a session high amid leadership from General Electric (GE 20.73, +0.63), which has climbed more than 3% without any clear headline or catalyst to account for its strength.
HFE says FOMC statement shows "No changes to the key outcomes of the meeting, so no surprises there, but there are changes to the statement. The Fed says it 'is prepared to adjust its holdings as needed". HFE says odds of QE3 are tiny.
Economist Chris Low at FTN says significant change in FOMC language was about describing the securities portfolio. "In March, the FOMC said, 'will regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information.' Today it said, 'will regularly review the size
and composition of its securities holdings in light of incoming information.' This change may simply reflect the fact that QE2 will essentially be over by the time the Fed meets again on June 22. But it can also be read as the start of a conversation about possible asset sales in the future."
The dollar dropped against the euro for a seventh day after the Federal Reserve said a pickup in inflation is likely to be temporary as it decided to finish $600 billion of bond purchases on schedule in June.
The greenback earlier touched its lowest level since December 2009 on speculation the Fed will keep borrowing costs low.
Fed Chairman Ben S. Bernanke is due today to give his first press conference after a policy meeting.
“The Fed is staying the course,” said Vassili Serebriakov, a currency strategist at Wells Fargo & Co.. “This should not stand in the way of further dollar weakness. It’s obviously no change to the Treasury buying program, as was expected.”
The central bank held its target rate for overnight lending between banks at zero to 0.25%, as forecast. The benchmark has stayed at that level since December 2008.
“The economic recovery is proceeding at a moderate pace and overall conditions in the labor market are improving gradually,” the Federal Open Market Committee said in its statement after a two-day meeting.
The Fed announced in November it would buy $600 billion in Treasuries in an effort to stabilize the U.S. economy under the second round of quantitative easing.
Consumer prices increased in March for a ninth consecutive month, led by gains in food and fuel costs, according to the Labor Department. The U.S. unemployment rate dropped last month to a two-year low of 8.8%.
The economy grew at a 2% annual pace in the first quarter after a 3.1% rate of expansion in the last three months of 2010, according to the median forecast of economists before tomorrow’s report from the Commerce Department.
The outlook on Japan’s AA- local-currency government debt rating, the fourth-highest grade, was lowered to “negative” from “stable,” S&P said today, citing costs for rebuilding after the nation’s record earthquake on March 11.
The yen has weakened 5.2% over the past month. The dollar has declined 4%.
The Australian dollar touched a record on speculation the Reserve Bank of Australia will raise borrowing costs to contain accelerating inflation.
No change in $600b QE2 thru June or rates, keeps 'extended pd'. Says labor mkt 'improving gradually' but drops econ on 'firmer footing' - now says recovery 'proceeding at mod pace.' Again mentions commods/oil but not Japan; more talk on inflation ('has picked up'). Will pay close attention to infl/expectations. Vote 10-0.
Treasuries have been stuck in the red all session. Results from today's auction of 5-year Notes didn't help their position.
Weakness among materials stocks is widespread, but steel stocks are being hit with some of the hardest selling. In turn, AK Steel (AKS 16.43, -0.53) has handed back some of the gain that it had made in the prior session. Meanwhile, U.S. Steel (48.21, -1.51) has extended its prior session slide to set a new multi-month low. Following an earnings miss yesterday, shares of X were downgraded by analysts at Goldman Sachs.
Pierpont economist Steve Stanley says "Durable goods orders rose back in March after a disappointing Feb." He ests core ordes +2.4%, and says "much of the February weakness was revised away."
EUR/JPY challenged Y121.00 where pffers were mentioned. Cross rose after flushing stops atop Y120.80. Further offers eyed at Y121.40/50.
The major equity averages are near the neutral line in the first few minutes of trade. Energy stocks have been a drag; they are down 0.5% following an earnings miss from heavyweight ConocoPhillips (COP 79.12, -2.09). However, better-than-expected quarterly results have helped Baker Hughes (BHI 77.41, +3.35) open with a strong gain that actually put the stock at its best level in more than two years.
Seen meeting supply around the $1.6570 area, the level corresponding to a 76.4% retrace of the move down from post GDP highs of $1.6582 to $1.6532. If rate can clear $1.6570 exposes that earlier high, with stronger resistance noted between $1.6595/00 ($1.6600 2011 high Apr 21).
U.S. stocks were headed for early gains Wednesday, as investors sort through the latest corporate results ahead of a highly anticipated press conference at the Federal Reserve.
U.S. stocks finished at their highest levels in three years Tuesday, as investors cheered another batch of solid earnings and a better-than-expected report on consumer confidence.
Investors will turn their attention to tight-lipped Federal Reserve Chairman Ben Bernanke's first of what will become four regular press conferences a year.
The speech and question-and-answer session will follow the Fed's two-day meeting on monetary policy.
While the Fed's Open Market Committee is not expected to raise interest rates, investors are hoping to get some sense of how soon the central bank could move to tighten its easy money stance.
Companies: Johnson & Johnson (JNJ) said it will buy Synthes, a Swiss maker of orthopedic devices, for $21.3 billion. Shares of J&J eased about 1% before the opening bell.
Shares of Dow component Boeing (BA) edged higher in premaket trading after the aeronautics company said it earned 78 cents per share in the first quarter, up from 70 cents a year earlier. Analysts were expecting 70 cents per share, according to Thomson Reuters.
BP (BP) reported first-quarter earnings of $1.75 per U.S.-listed share, down from $1.79 per share in the year-ago quarter. The British oil company was expected to report $1.82 per share.
Amazon.com (AMZN)'s stock fell 2% in premarket trading after the online merchant reported first-quarter earnings that fell by one-third compared to a year earlier and sharply missed Wall Street forecasts.
After the close, Starbucks (SBUX) reports results. The coffee retailer is expected to earn 34 cents a share.
Oil for May delivery gained 44 cents to $112.66 a barrel.
Gold futures for June delivery rose $3.10 to $1,506.70 an ounce.
The price on the benchmark 10-year U.S. Treasury held steady, with the yield unchanged from Tuesday at 3.32%.
The dollar fell to a 16-month low versus the euro on speculation the Federal Reserve will signal it will keep interest rates low at today’s meeting to support the U.S. economy after its bond-buying program expires in June.
The Dollar Index dropped for a seventh day, the longest streak since December. The yen weakened against all of its major counterparts after Standard & Poor’s cut Japan’s sovereign- rating outlook to “negative.” The Australian dollar rose to a record after a report showed consumer prices climbed the most since 2006. The pound climbed against the dollar after a report showed Britain’s economy rebounded in the first quarter.
“There is not an awful lot of scope for the Federal Reserve to do anything else but to keep its policy loose for a while,” said Jane Foley, a senior currency strategist at Rabobank International in London. “I don’t think the Fed will feel the need to signal a shift in policy. In an environment where interest-rate differentials are key drivers of the market, the dollar is not going to do well against higher-yielding currencies, including the euro.”
Pierpont Securities says talk of QE exit will heat up later but for this wk "confirming the end of QE2 and getting through the first press conference without any hiccups will likely be considered a victory" by the FOMC. "Extended pd" should be kept and it's doubtful there will be dissents.
Offers: $1.4720, $1.4750, $1.4780/85
Bids: $1.4650, $1.4630/20, $1.4585/80, $1.4550
Offers: Y82.40/50, Y82.90, Y83.00/10
Bids: Y81.80, Y81.50, Y81.20, Y81.00, Y80.70/50
USD/JPY Y81.50 (large), Y81.80, Y82.00, Y82.05, Y82.75, Y83.00, Y83.05
EUR/JPY Y120.00, Y122.75
Spikes up from around $1.6448 to $1.6519 on release of as forecast UK GDP data, coming in at 0.5%, with pre release whispers suggesting a softer 0.3% release.
Preliminary GDP estimate from the U.K. - the major report ot the europ;ean session on Wednesday (08:30 GMT).
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