June 28, 2017

Stocks Up as Traders Expect a Small Cut in Fed Stimulus

Wall Street indexes rose on Tuesday on expectations the Federal Reserve will make only modest changes to a monetary policy that has been highly supportive of stocks and other assets.

In afternoon trading the Standard Poor’s 500-share index gained 0.4 percent, the Dow Jones industrial average was 0.3 percent higher and the Nasdaq composite 0.7 percent.

The policy-setting Federal Open Market Committee was to begin its two-day meeting on Tuesday to discuss whether to scale back its monthly bond purchases, or quantitative easing. Many investors expect Fed chairman, Ben S. Bernanke, will announce a scale-back of purchases by $10 billion a month to $75 billion, while keeping rates close to zero.

“It seems like now the market is believing that tapering will be very well managed by Bernanke, that he knows exactly what the market is expecting and that he’s not going to disappoint,” said Jack De Gan, principal and senior adviser at Harbor Advisory in Portsmouth, N.H. “We know that the tapering will be subjective based on the economic information that is coming in, and that the interest rate policy will remains as it is for a very long time.”

Market sentiment was also pressured by President Obama who warned Republicans in Congress he will not negotiate over an extension of the federal debt ceiling as part of a budget fight.

The government’s economic data released on Tuesday showed United States consumer prices barely rose in August compared with July as the cost of energy fell, but an increase in rents and medical care costs pointed to a stabilization in underlying inflation that could allow the Federal Reserve to start trimming its bond purchases.

A separate report showed United States homebuilder sentiment was unchanged in September after four straight months of gains.

In Europe, markets ended the trading session generally lower, with the FTSEurofirst 300 index of blue chips off 0.5 percent. German Bunds edged lower after a survey from ZEW economic research organization showed German analyst and investor sentiment rose more than expected in September, prompting a search for higher yielding assets.

Asian markets also closed lower. Japan’s Nikkei stock average ended the session 0.7 percent lower, Hong Kong’s Hang Seng was 0.3 percent lower, and the Shanghai composite was 2.1 percent down.

In company news, Microsoft shares rose 0.4 percent to $33 after the company said it would buy back up to $40 billion of its shares and raise its quarterly dividend by 22 percent.

Apple shares, which closed below their 200-day moving average for the first time since August 2012, rose 1.7 percent.

Pandora Media shares were up 4.1 percent a day after the company warned that its business is slowing and proposed a follow-on offering of 10 million shares for capital expenditures, according to a regulatory filing.

Shares of Aéropostale jumped 20 percent after Sycamore Partners reported a 7.96 percent stake in the teen apparel retailer as of Sept. 9.

United States benchmark crude fell $1.45 a barrel, to $105.14, as easing worries over a potential military action on Syria calmed concerns of a disruption to Middle East oil supplies and after output resumed at a western Libyan oil field.

Gold fell 0.4 percent, to $1313.10 an ounce.

Article source: http://www.nytimes.com/2013/09/18/business/daily-stock-market-activity.html?partner=rss&emc=rss