Looming Fed Announcement May Lead To Choppy Trading On Wall Street

Looming Fed Announcement May Lead To Choppy Trading On Wall Street

The major U.S. index futures are pointing to a roughly flat opening on Wednesday after the major averages edged up to new record closing highs in the previous session.

Traders are likely to be reluctant to make significant moves ahead of the Federal Reserve’s monetary policy announcement this afternoon.

The announcement from the Fed is due at 2 pm ET, while Fed Chair Janet Yellen is scheduled to hold a press conference at 2:30 pm ET.

The Fed is widely expected to leave interest rates unchanged, although traders will pay close attention to the accompanying statement for clues about the outlook for policy.

The statement may offer details on how the central bank plans to start shrinking its $4.5 trillion balance sheet.

While buying interest was somewhat subdued, stocks moved modestly higher over the course of the trading session on Tuesday. With the upward move on the day, all three of the major averages ended the session at record closing highs.

The major averages ended the day in positive territory but off their best levels. The Dow rose 39.45 points or 0.2 percent to 22,370.80, the Nasdaq edged up 6.68 points or 0.1 percent to 6,461.32 and the S&P 500 inched up 2.78 points or 0.1 percent to 2,506.65.

The higher close by the major averages reflected a continuation of the upward momentum seen on Wall Street over the past several sessions.

However, traders seemed reluctant to make significant moves ahead of the Federal Reserve’s monetary policy announcement on Wednesday.

While the Fed is widely expected to leave interest rates unchanged, traders are likely to pay close attention to the accompanying statement for clues about the outlook for policy.

On the U.S. economic front, the Commerce Department released a report showing an unexpected decrease in new residential construction in the month of August.

The report said housing starts fell by 0.8 percent to an annual rate of 1.180 million in August from a revised 1.190 million in July. Economists had expected housing starts to jump by 1.7 percent.

A separate report released by the Labor Department showed increases in import and export prices in the month of August.

The Labor Department said import prices climbed by 0.6 percent in August after edging down by 0.1 percent in July. Economists had expected import prices to rise by 0.4 percent.

The report said export prices also rose by 0.6 percent in August following a 0.5 percent increase in the previous month. Export prices had been expected to edge up by 0.2 percent.

Telecom stocks showed a significant move to the upside on the day, driving the NYSE Arca Telecom Index up by 1.1 percent. With the gain, the index reached its best closing level in a month.

Sprint (S) and T-Mobile (TMUS) posted standout gains following a report from CNBC that the companies are in active talks about a merger.

Notable strength also emerged among banking stocks, as reflected by the 0.9 percent gain posted by the Dow Jones Banks Index. The advance lifted the index to its best closing level in over a month.

Chemical stocks also saw some strength on the day, while weakness was visible among biotechnology and healthcare stocks.

Commodity, Currency Markets

Crude oil futures are rising $0.54 to $50.02 a barrel after falling $0.43 to $49.48 a barrel on Tuesday. Gold futures, which edged down $0.20 to $1,310.60 an ounce in the previous session, are climbing $5.50 to $1,316.10 an ounce.

On the currency front, the U.S. dollar is trading at 111.35 yen compared to the 111.59 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.2001 compared to yesterday’s $1.1994.

Asia

Asian stocks recouped early losses to end mixed on Wednesday following positive overnight cues from Wall Street and Europe.

Investors adopted a cautious stance ahead of the U.S. Federal Reserve’s monetary policy decision due later in the day.

Chinese stocks ended on a firm note amid optimism that Beijing will maintain stability in financial markets ahead of next month’s key party congress meeting. The benchmark Shanghai Composite index rose 9.52 points or 0.3 percent to 3,366.37, while Hong Kong’s Hang Seng Index climbed 76.39 points or 0.3 percent at 28,127.80.

Japanese shares closed roughly flat as investors digested upbeat exports data and the yen went into consolidation mode ahead of the Bank of Japan’s monetary policy meeting on Thursday.

The Nikkei 225 Index edged up 11.08 points or 0.1 percent to 20,310.46. The broader Topix index ended little changed at 1,667.92.

Japanese exports climbed 18.1 percent year-on-year to 6.278 trillion yen in August, official data showed today, beating forecasts for a gain of 14.3 percent. Imports picked up an annual 15.2 percent to 6.164 trillion yen, resulting in a trade surplus of 113.642 billion yen in the month.

Australian shares recouped early losses to end little changed even as financials and mining stocks came under selling pressure. ANZ, Westpac and NAB dropped between 0.2 percent and 0.6 percent as market pricing shifted further towards rate tightening.

Miners also fell after Chinese steel futures hit their lowest level in almost a month. Rio Tinto lost 1.2 percent and Fortescue Metals Group tumbled 1.8 percent.

Energy stocks fell broadly, while telecommunications and IT firm TPG Telecom fell as much as 6.7 percent. Seven Group Holdings soared 9.8 percent after announcing it would buy the remaining 53.3 percent stake in equipment hire company Coates Hire for A$517 million.

Seoul stocks edged down marginally as investors awaited the Fed’s policy statement for directional cues. The benchmark Kospi slid 3.85 points or 0.2 percent to 2,412.20, dragged down by chemical companies and retailers.

Europe

European stocks are little changed on Wednesday ahead of the U.S. Federal Reserve’s monetary policy decision due later in the day.

While the French CAC 40 Index is up by 0.1 percent, the U.K.’s FTSE 100 Index and the German DAX Index are both down by 0.1 percent.

The pound surged against both the dollar and euro after official data showed U.K. retail sales increased at a faster pace in August.

Retail sales volume including auto fuel advanced 1 percent from July, the strongest growth in four months and up from July’s increase of 0.6 percent.

Spanish multinational clothing company Inditex has moved lower after its first-half net profit came in slightly below estimates.

Cairn Energy has also moved to the downside after issuing a procedural update on its dispute with the Government of India under the U.K. India Bilateral Investment Treaty.

Ryanair Holdings shares have declined on reports that the discount airline has offered its pilots a one-off bonus of up to 12,000 euros in a bid to avoid the damage caused by flight cancellations through the end of October.

German construction firm Hochtief has slumped on a report that its supervisory board is discussing an offer to buy Spain’s Abertis.

Meanwhile, telecoms firm Altice has risen as Portuguese regulators cleared its bid for a media company. British home improvement retailer Kingfisher has also jumped after its first-half profit beat forecasts.

France’s Ipsen has rallied on receiving approval from the European Commission for Xermelo used to treat carcinoid syndrome diarrhea.

U.S. Economic Reports

At 10 am ET, the National Association of Realtors is scheduled to release its report on existing home sales in the month of August. Existing home sales are expected to rise by 0.3 percent.

The Energy Information Administration is due to release its report on oil inventories in the week ended September 15th at 10:30 am ET. Crude oil inventories are expected to increase by 3.5 million barrels.

At 2 pm ET, the Federal Reserve is scheduled to announce its monetary policy decision, while Fed Chair Janet Yellen is due to hold a press conference at 2:30 pm ET.

Stocks In Focus

Shares of Bed Bath & Beyond (BBBY) are moving sharply lower in pre-market trading after the home goods retailer reported weaker than expected second quarter earnings and lowered its full-year guidance.

Delivery giant FedEx (FDX) may also see early weakness after cutting its full-year earnings guidance due to the impact of a cyberattack.

Shares of Adobe Systems (ADBE) are also seeing pre-market weakness after the software company reported better than expected fiscal third quarter results but provided a mixed outlook.

Meanwhile, shares of Alnylam Pharmaceuticals (ALNY) are jumping in pre-market trading after the biopharmaceutical company reported positive results for its treatment of a rare genetic disease.

Drug giant Pfizer (PFE) may also move to the upside after Morgan Stanley upgraded its rating on the company’s stock to Overweight from Equal-Weight.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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