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| | US Market | | The major U.S. index futures are pointing to a lower opening on Thursday, with sentiment reflecting apprehensions of traders after yesterday's Fed-induced rally. The first meaningful economic evidence released after the Fed announcement showed that jobless claims unexpectedly rose in the recent reporting week. Given the magnitude of yesterday's advance, some degree of pullback seems logical even as traders persist with economic hopes.
U.S. stocks skyrocketed on Wednesday, cheering the FOMC announcement, as traders heaved a collective sigh of relief over the central bank's measured approach towards stimulus withdrawal. The major averages, which moved about in a nervous manner until the Fed announcement, rallied sharply for the rest of the session.
The Dow Industrials ended up 292.71 points or 1.84 percent at a new record closing high of 16,168 and the S&P 500 Index also settled at a fresh record of 1,811 by virtue of its 29.65 points or 1.66 percent advance. The Nasdaq Composite Index added 46.38 points or 1.15 percent before settling at a fresh multi-year high of 4,070.
Twenty-nine of the thirty Dow components rose in the session, while Boeing retreated modestly. Exxon Mobil , 3M Co. JP Morgan Chase and Goldman Sachs were among the biggest gainers of the session.
Biotechnology, retail, housing, Oil and financial stocks outperformed in the session, while Gold stocks bucked the uptrend.
On the economic front, the Federal Reserve's policy announcement played out in line with expectations, with the central bank acknowledging the recent strong data and announcing a modest pullback in stimulus. Citing the improvement in the labor market and the brightening labor market outlook, the central bank said it would begin reducing its bond purchase program by a total of $10 billion per month beginning in January. The Fed will now buy agency mortgage-backed security at a pace of $35 billion per month and longer-term Treasury security at a pace of $40 billion per month.
The real cheer for the markets came from the Fed's assurance that it will maintain the current extremely accommodative Fed funds rate of 0-0.25 percent well past the time the unemployment rate drops below 6.5 percent, provided inflation continues to run below its 2 percent longer term target. Earlier, the central bank had promised such an accommodative stance at least as long as the jobless rate remains above 6.5 percent.
Meanwhile, the Fed's commentary on economic conditions was also altered slightly. While continuing to term the economy recovery as moderate, the central bank acknowledged the decline in the unemployment rate, although terming it as remaining elevated. The risks to the outlook for the economy and the labor market were seen to becoming more nearly balanced, while earlier the central bank pointed to diminishing downside risks.
The updated FOMC forecasts did not show marked alteration to the central bank's GDP outlook. The central tendency GDP forecast for 2013 was adjusted to 2.2-2.3 percent from 2-2.3 percent and the unemployment rate forecast was adjusted to 7-7.1 percent from 7.1-7.3 percent.
The Commerce Department reported that housing starts totaled 1.091 million units on a seasonally adjusted annual rate in November, ahead of expectations and the 889,000 reported for October. Single-family starts rose to 727,000 from 602,000, marking the highest level since May 2008. Building permits totaled 1.007 million units.
The strong rally by The Dow Industrials in response to the Fed announcement took it past several key resistances and into unchartered territory. The 14-day relative strength index has just gone above the neutral zone and is currently at around 53. In the eventuality of the Fed euphoria fading and the markets coming to terms with realities, the index could retrace some of its gains. On the downside, the index has support around 16,095, 16,032, 15,968 and 15,876. |
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| | US Economic Reports |  | | CADUSD | Oil | Gold | Allbanc |  |  |  |  | | Please click on the images to view our interactive charts | | | Following the substantial increase seen in the previous week, first-time claims for U.S. unemployment benefits unexpectedly saw some further upside in the week ended December 14th.
The Labor Department released a report on Thursday showing that initial jobless claims climbed to 379,000, an increase of 10,000 from the previous week's figure of 369,000. The modest increase came as a surprise to economists, who had expected jobless claims to drop to 337,000 from the 368,000 originally reported for the previous week.
Dallas Federal Reserve Bank President Richard Fisher is due to speak on the Texas economy in Dallas also at 8:30 am ET.
The Philadelphia Federal Reserve is due to release the results of its regional manufacturing survey at 10 am ET. The consensus estimates call for an improvement in the index to 10 in December from 6.5 in November.
Philadelphia region Manufacturing activity grew at a notably slower pace in November. The manufacturing index fell to 6.5 from 19.8 in October. The new orders index declined to 11.8 from 27.5 and the order backlogs fell to -4.2 from 9.1. Additionally, the shipments index plunged 15 points, the number of employees index moved down 14 points to 1.1 and the average workweek index declined 17 points to -8.6. The 6-month outlook index also dropped, falling to 45.8 from 60.8.
The National Association of Realtors will also release its existing home sales report for November at 10 am ET. Economists expect existing home sales to come in at a seasonally adjusted annual rate of 5.020 million units compared to 5.12 million units in October.
Existing home sales came in at a seasonally adjusted annual rate of 5.12 million units in October, down from 5.29 million units in September. Inventories measured in terms of months of supply rose to 5 months from 4.9 months. The median price of an existing home rose 12.8 percent year-over-year. First-time homebuyers accounted for 28 percent of the purchases, remaining below the historical trend.
The Conference Board is due to release its leading economic indicators index for November at 10 am ET. The consensus estimates call for a 0.7 percent month-over-month increase by the index, faster than the 0.2 percent increase in October.
The 0.2 percent increase in the leading economic indicators index for October followed an increase of the same magnitude in September and a 0.7 percent increase in August. The Conference Board noted that housing and manufacturing variables contributed to the upside. The coincident economic indicators index edged up 0.2 percent and the lagging economic indicators index was up 0.3 percent. |
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| | Stocks in Focus | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | Oracle reported second quarter non-GAAP earnings of 69 cents per share on non-GAAP revenues of $9.3 billion, up 2 percent year-over-year. However, non-GAAP new software licenses and cloud software subscription revenues slipped 1 percent to $2.4 billion. The results were above estimates.
Paychex reported second quarter earnings of 43 cents per share, up 5 percent year-over-year, while its total service revenues rose 7 percent to $600.5 million. The results were better than expected. Additionally, the company said it expects fiscal net income growth of 8-9 percent and total service revenue growth of 5-6 percent.
Herman Miller reported second quarter adjusted earnings of 42 cents per share on net sales of $470.5 million, up 6.5 percent. The results came in ahead of expectations.
Apogee reported third quarter earnings of 33 cents per share, up 18 percent year-over-year, while its revenues rose 5 percent to $199.4 million. The company narrowed its 2014 earnings outlook to 95 cents to $1 per share and forecast 10-11 percent revenue growth. The results trailed estimates, while the guidance was positive.
Semtech announced a reduction to its fourth quarter guidance, citing the shortfall on ongoing delays in carrier capex spending and a 6-month push-out in the ramp of a new consumer mobile platform. The company now expects non-GAAP earnings of 18-24 cents per share, down from its previous projection of 29-37 cents per share. The company also lowered its net revenue guidance to $120 million to $130 million from $132 million to $144 million. The guidance trailed expectations.
AutoZone said its board authorized the buyback of an additional $750 million of its common stock.
MDU Resources increased its 2013 adjusted earnings per share guidance to $1.45-$1.50 from $1.35-$1.45, although it retained its GAAP earnings guidance in the same range. The company also noted that Standard & Poor's affirmed a BBB+ corporate credit rating and stable outlook.
SM Energy said its board has approved a $1.9 billion capital program for 2014, up from $1.65 billion in 2013. The company also said it expects production to grow 16 percent year-over-year to 51 MMBOE to 53.3 MMBOE.
AAR Corp. Cintas , NIKE , Red Hat and TIBCO Software are among the companies due to release their quarterly results after the close of trading. |
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| | European Market | | European stocks opened higher and are seen broadly moving sideways, as traders react to the Fed decision.
On the economic front, a report released by the U.K. Office for National Statistics showed that U.K. retail sales rose 0.3 percent month-over-month in November. The increase was in line with expectations.
The European Central Bank reported that the eurozone's current account surplus increased to 21.8 billion euros in October from 14.9 billion euros in September. The increase reflected a wider trade surplus. |
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| | Asian Markets | | | | USDCAD | USDEUR | USDGBP | USDJPY |  |  |  |  | | Please click on the images to view our interactive charts | | | The major Asian markets closed on a mixed note, with the Chinese, Hong Kong, Malaysian and Indian markets retreating, while the rest of the major markets in the region advanced. Optimism over the Fed's accommodative stance triggered some buying even as domestic concerns weighed on some of the markets.
The Japanese market was once again the beneficiary of a weaker yen, which retreated against the dollar in reaction to the Fed decision. Japan's Nikkei 225 average opened higher and moved roughly sideways for the rest of the session before closing up 271.42 points or 1.74 percent at 15,859. A majority of stocks advanced in the session, with retail and retail stocks leading the gains.
Australia's All Ordinaries opened higher and advanced steadily throughout the session. The index ended 102.70 points or 2.01 percent higher at 5,202. The market witnessed broad based strength, with energy and material stocks outperforming the rest of the sectors.
Hong Kong's Hang Seng Index closed at 22,889, down 255.07 points or 1.10 percent, and China's Shanghai Composite Index fell 20.49 points or 0.95 percent before closing at 2,128.
On the economic front, Japan's Ministry of Economy, Trade and Industry reported that its index measuring all industry activity in Japan fell 0.2 percent month-over-month in October, reversing some of the 0.5 percent increase in September. Economists expected a steeper 0.3 percent drop.
Revised estimates released by the Cabinet Office showed that its leading economic indicators index for Japan rose less than estimated. The index rose to 109.8 in October, up from 109.1 in September but representing a downward revision from the preliminary reading of 109.9. |
| | Currency and Commodities Markets | | Crude Oil futures are edging down $0.08 to $97.98 a barrel after advancing $0.58 to $97.80 a barrel on Wednesday.
The previous session's advance came amid the increase in risk appetite and the release of the weekly petroleum status report, which showed that Crude oil stockpiles fell by 2.9 million barrels to 372.3 million barrels in the week ended December 13th. Inventories were above the upper limit of the average range.
Distillate inventories declined by 2.1 million barrels and were below the lower limit of the average range. Meanwhile, gasoline stockpiles rose by 1.3 million barrels and were above the upper limit of the average range. Refinery capacity averaged 91.5 percent over the four weeks ended December 13th compared to 90.7 percent over the four weeks ended December 6th.
Gold futures, which rose $4.90 to $1,235 an ounce in the previous session, are currently slipping $32 to $1,203 an ounce.
Among currencies, the U.S. dollar is trading at 104.14 yen compared to the 104.28 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.3675 compared to yesterday's $1.3685. |
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