Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Pre-Market Primer: Retail Sales Unexpectedly Rise; Fed Looks for the Exit

By

Reports show that the Fed might wind down its level of monetary stimulus.

PrintPRINT
Stocks pointed south this morning as reports emerge that the Fed planning to scale back its asset purchases and retail sales data came up better than expected.

US sales rose 0.1% on a monthly basis, beating bearish forecasts. Economists expected to see a 0.3% fall in April sales after March's upwardly revised 0.5% drop as consumers belatedly feel the crunch from the broad-ranging payroll sales tax that went into effect on Jan. 1. Excluding gas and autos, sales rose 0.6%.

Over the weekend, the Wall Street Journal's Jon Hilsenrath, nicknamed the "Fed Whisperer," reported that the Federal Reserve is already making plans to wind down its $85 billion monthly asset purchase program.

"Officials are focusing on clarifying the strategy so markets don't overreact about their next moves," Hilsenrath wrote. "For example, officials want to avoid creating expectations that their retreat will be a steady, uniform process like their approach from 2003 to 2006, when they raised short-term interest rates in a series of quarter-percentage-point increments over 17 straight policy meetings."

The prospect that the Fed might turn off the tap weighed on stock futures this morning. Before the opening bell, Dow (INDEXDJX:.DJI) futures were down 0.22% at 15,035. S&P 500 (INDEXSP:.INX) futures slipped 0.27% to 1,625.20. Nasdaq (INDEXNASDAQ:.IXIC) futures fell 0.31% to 2,966.25.

European stocks are declining today while the Eurogroup of finance ministers meet to formally approve the first tranche of aid to Cyprus, worth 3 billion euros, and the next package of Greece's ongoing bailout. Meanwhile, figures released today showed that construction activity in Greece fell 42.9% year over year in February. The Eurogroup will hold a press conference at 11 p.m. British time, 8 p.m. EDT.

Italy had a successful bond auction, where it sold 8 billion euros of debt for various maturities at lower yields. Debt maturing in 2026 sold at 4.07% yield, down from 4.55% at a similar auction in February.

Fitch found that 41% of European fund managers surveyed felt that the European financial crisis is as good as over thanks to policy action, while 30% felt that the markets were irrationally exuberant.

Japan led Asian stocks, as the Nikkei (INDEXNIKKEI:.NI225) rose 1.20% to the highest level in more than five years as the G-7 finance ministers opted not to reprimand the country for its bold currency manipulation.

Chinese industrial production rose 9.3% on a yearly basis in April, just short of estimates. Retail sales in the country rose 12.8%.

In corporate news, shares of Corning (NYSE:GLW) rose 1.9% after Barclays (NYSE:BCS) raised its recommendation to overweight and Morgan Stanley (NYSE:MS) raised it to equal weight. Last month, the company, which manufactures the Gorilla Glass found in smartphone screens, raised its dividend by 11%.

Dell (NASDAQ:DELL) board members are entertaining the late offer from Carl Icahn and Southeastern Asset Management to take the computer company over, as an alternative to the $24.4 billion deal with Silver Lake Partners and founder Michael Dell. The board asked Icahn and company for more information about the offer. Last week, Icahn said that Mr. Dell should no longer lead his company.

Twitter: @vincent_trivett
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
PrintPRINT

Busy? Subscribe to our free newsletter!

Submit
 

WHAT'S POPULAR IN THE VILLE