As the much-awaited decision from the Federal Reserve looms, stocks are heading upward. Good global economic date helped, including a huge jump in US housing construction.
The last Federal Open Market Committee meeting headed by Ben Bernanke could be the one in which the markets find out the exact start date for the “taper” of quantitative easing that was announced in May. A majority of economists surveyed by Reuters expect the Fed to start scaling back monetary stimulus in the first quarter of 2014, but some say that it could come this month.
The overall mood in global stock markets is positive. Dow
(INDEXDJX:.DJI) futures were up 0.22% at 15,845.00 before the opening bell on Wednesday while S&P 500
(INDEXSP:.INX) futures rose 0.19% to 1,776.40. Nasdaq
(INDEXNASDAQ:.IXIC) futures climbed 0.14% to 3,465.50. Bonds were little changed. The 10-year Treasury yield rose one basis point to 2.85%.
On the economic front, housing starts rose 29.6% year-over-year to an annualized rate of 1.09 million in November. Economists expected builders to break ground on new homes at a rate of 952,000. Most of the gains came from single-family houses and apartments.
This afternoon, when the Fed announces its policy decision, it will also release its forecasts for GDP and other economic data.
Corporate earnings also moved markets this morning. Shares of FedEx Corporation
(NYSE:FDX) fell 0.68% after the transportation and logistics company reported fiscal second-quarter earnings that missed estimates. Earnings per share for the economic bellwether rose to $1.57 from $1.39 a year ago, when Superstorm Sandy affected the business. Analysts had expected EPS of $1.64 per share. Revenue was also slightly short at $11.4 billion.
(NYSE:LEN) share rose 1.6% in the pre-market after the homebuilder said that fiscal fourth-quarter profit rose to $0.73 per share, up from $0.56 per share a year ago as revenue jumped 42% to $1.92 billion.
General Mills Inc.
(NYSE:GIS) fell 2.2% after reporting fiscal second-quarter profit of $0.84 per share, up from $0.82 per share, missing estimates by a penny.
Overseas economic data was also positive. Germany’s Ifo Business Climate Index showed that economic sentiment this month rose to 109.5 points from 109.3 last month. Current conditions fell by 0.8 points to 11.6 and business expectations rose 1.1 points to 107.4. Britain’s unemployment rate unexpectedly fell by a fifth of a percentage point to 7.4% in October.
Japan announced that the cheap yen boosted exports by 18.4% year-over-year in November, but imports also rose 21.1%, widening the country’s trade deficit to 1.293 trillion yen.
Bitcoin plunged 30% after a Bitcoin exchange in China, where the untraceable digital currency is popular for storing riches out of the taxman’s reach, announced that it will no longer trade it for renminbi.
No positions in stocks mentioned.
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