Heading into the final hour of trading, U.S. stocks were falling after the Federal Reserve's Open Market Committee decided to end its monthly bond buying, otherwise known as quantitative easing, this month. The Federal Reserve confirmed it is ending its monthly bond buying program, which caused the central bank's balance sheet to swell to $4.48 trillion, and it provided a stronger-than-expected outlook on the U.S. labor market and economy. The S&P 500 fell 0.36%, while Nasdaq fell 0.48%. The Dow Jones Industrial Average fell 0.51%, accelerating losses in midday trading.
The Fed said it is seeing "solid job gains" and falling under-utilization in the labor market, indicating its views on the economy are strengthening. "On balance, a range of labor market indicators suggests that underutilization of labor resources is gradually diminishing," the central bank said.
The Fed also said it will keep a 0.0%-to-0.25% target for federal funds rate for a considerable time following the end of QE. The yield on the 10-year U.S. Treasury rose on the Fed's announcement, hitting 2.31%, while Gold fell 1.5% to $1,213 a troy ounce. The 5-Year Treasury note was the biggest mover on Wednesday, rising 7 basis to 1.59%. Narayana Kocherlakota, a voting member of the FOMC, dissented to Wednesday's action, arguing the central bank should continue its bond buying and commit to maintaining low interest rates until one-to-two-years after inflation hits a 2% target.
Brad Wilson, vice president of fixed income portfolio management at Boston Private Bank, said he expects the Fed to keep interest rates low for an extended period even after the central bank ends its bond-buying program. "It is tough to drive interest rates higher when there is no wage growth," Wilson said in a telephone interview on Monday evening.
"The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run," the Federal Reserve said in its statement on Wednesday.
Guy Lebas, chief fixed income strategist at Janney Montgomery Scott, said he expects the Fed to begin raising interest rates in September 2015. In commodities markets, energy was bolstered by a report from the Energy Information Administration that said U.S. oil inventories rose 2.06 million barrels last week, a lower-than-forecast increase.
Oil inventories rose 2.06 million barrels in the last week of October, the EIA said. Analysts had expected inventories to rise 3.65 million barrels. The EIA's report, in addition to OPEC secretary general Abdalla El-Badri's forecast that global output won't rise in 2015, helped push oil higher after the commodity has fluctuated near multi-year lows this month.
Nymex West Texas Intermediate Crude was trading up 0.76% at $82.04 in mid-morning trading Wednesday, while ICE Brent was higher at $87.04. Oil has tumbled in 2014 amid fears of oversupply. Energy was the best-performing sector on the S&P 500 with Newfield Exploration (NFX) and Cimarex Energy (XEC) leading the sector higher.
Equity markets traded on Facebook's (FB) disappointing profit outlook and a decision by Fiat Chrysler Automotive Group (FCAU) to spin off part of its Ferrari division in 2015.
Fiat Chrysler Automotive Group shares surged more than 11% in afternoon trading after CEO Sergio Marchionne said the automaker plans to spin off 10% of Ferrari in 2015. Facebook shares tumbled more than 6% in afternoon trading after the social network said it expects costs to grow by 55% to 75% in 2015 as it ramps up investment in its work force, and integrates acquisitions such as WhatsApp and OculusRift.
Deutsche Bank (DB) posted a third-quarter loss of 92 million euros ($116 million) as the bank faced ongoing financial burdens from lawsuits, new regulations and its effort to shed risky past investments. Shares in the conglomerate fell more than 2%.
Gilead Sciences (GILD) reported adjusted earnings in the third quarter of $1.84 a share, topping analysts' forecasts. The HIV and hepatitis C drugmaker posted revenue of $6.04 billion; analysts were expecting $5.88 billion. Gilead said sales of Sovaldi, a hepatitis C drug, were $2.8 billion in the third quarter, below forecasts. Shares in the company were trading 1.30% lower in trading.
French drugmaker Sanofi (SNY) fired its CEO after he warned that pricing pressure on Lantus, a best-selling diabetes treatment in the U.S., would hurt growth into next year. Shares in Sanofi were tumbling more than 6%.
Orbital Sciences (ORB) , whose unmanned rocket exploded seconds after launch on Tuesday night. The rocket was carrying about 5,000 pounds of cargo for NASA and the International Space Station. After trading lower by 15%, Orbital Sciences shares were halted in midday trading.
Sodastream (SODA) , Ralph Lauren (RL) and Hyatt Hotels (H) were trading lower after reporting third-quarter earnings in the on Wednesday, while Exelon (EXC) and Phillips 66 (PSX) were trading higher.
Visa (V) and Metlife (MET) will report third-quarter earnings after the market close on Wednesday. Visa is expected to earn $2.10 a share for the third quarter, while Metlife is forecast to earn $1.38, according to consensus estimates compiled by Bloomberg.
source: TheStreet
The Fed said it is seeing "solid job gains" and falling under-utilization in the labor market, indicating its views on the economy are strengthening. "On balance, a range of labor market indicators suggests that underutilization of labor resources is gradually diminishing," the central bank said.
The Fed also said it will keep a 0.0%-to-0.25% target for federal funds rate for a considerable time following the end of QE. The yield on the 10-year U.S. Treasury rose on the Fed's announcement, hitting 2.31%, while Gold fell 1.5% to $1,213 a troy ounce. The 5-Year Treasury note was the biggest mover on Wednesday, rising 7 basis to 1.59%. Narayana Kocherlakota, a voting member of the FOMC, dissented to Wednesday's action, arguing the central bank should continue its bond buying and commit to maintaining low interest rates until one-to-two-years after inflation hits a 2% target.
Brad Wilson, vice president of fixed income portfolio management at Boston Private Bank, said he expects the Fed to keep interest rates low for an extended period even after the central bank ends its bond-buying program. "It is tough to drive interest rates higher when there is no wage growth," Wilson said in a telephone interview on Monday evening.
"The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run," the Federal Reserve said in its statement on Wednesday.
Guy Lebas, chief fixed income strategist at Janney Montgomery Scott, said he expects the Fed to begin raising interest rates in September 2015. In commodities markets, energy was bolstered by a report from the Energy Information Administration that said U.S. oil inventories rose 2.06 million barrels last week, a lower-than-forecast increase.
Oil inventories rose 2.06 million barrels in the last week of October, the EIA said. Analysts had expected inventories to rise 3.65 million barrels. The EIA's report, in addition to OPEC secretary general Abdalla El-Badri's forecast that global output won't rise in 2015, helped push oil higher after the commodity has fluctuated near multi-year lows this month.
Nymex West Texas Intermediate Crude was trading up 0.76% at $82.04 in mid-morning trading Wednesday, while ICE Brent was higher at $87.04. Oil has tumbled in 2014 amid fears of oversupply. Energy was the best-performing sector on the S&P 500 with Newfield Exploration (NFX) and Cimarex Energy (XEC) leading the sector higher.
Equity markets traded on Facebook's (FB) disappointing profit outlook and a decision by Fiat Chrysler Automotive Group (FCAU) to spin off part of its Ferrari division in 2015.
Fiat Chrysler Automotive Group shares surged more than 11% in afternoon trading after CEO Sergio Marchionne said the automaker plans to spin off 10% of Ferrari in 2015. Facebook shares tumbled more than 6% in afternoon trading after the social network said it expects costs to grow by 55% to 75% in 2015 as it ramps up investment in its work force, and integrates acquisitions such as WhatsApp and OculusRift.
Deutsche Bank (DB) posted a third-quarter loss of 92 million euros ($116 million) as the bank faced ongoing financial burdens from lawsuits, new regulations and its effort to shed risky past investments. Shares in the conglomerate fell more than 2%.
Gilead Sciences (GILD) reported adjusted earnings in the third quarter of $1.84 a share, topping analysts' forecasts. The HIV and hepatitis C drugmaker posted revenue of $6.04 billion; analysts were expecting $5.88 billion. Gilead said sales of Sovaldi, a hepatitis C drug, were $2.8 billion in the third quarter, below forecasts. Shares in the company were trading 1.30% lower in trading.
French drugmaker Sanofi (SNY) fired its CEO after he warned that pricing pressure on Lantus, a best-selling diabetes treatment in the U.S., would hurt growth into next year. Shares in Sanofi were tumbling more than 6%.
Orbital Sciences (ORB) , whose unmanned rocket exploded seconds after launch on Tuesday night. The rocket was carrying about 5,000 pounds of cargo for NASA and the International Space Station. After trading lower by 15%, Orbital Sciences shares were halted in midday trading.
Sodastream (SODA) , Ralph Lauren (RL) and Hyatt Hotels (H) were trading lower after reporting third-quarter earnings in the on Wednesday, while Exelon (EXC) and Phillips 66 (PSX) were trading higher.
Visa (V) and Metlife (MET) will report third-quarter earnings after the market close on Wednesday. Visa is expected to earn $2.10 a share for the third quarter, while Metlife is forecast to earn $1.38, according to consensus estimates compiled by Bloomberg.
source: TheStreet