#PreMarket Primer: Tuesday, October 29: Fed Meeting Likely Uneventful
The dollar sagged on Tuesday as the two day US Federal Reserve policy meeting got underway. Most are expecting the bank to maintain its easy money asset purchase program and delay any cut backs on the stimulus until at least March.
September’s US manufacturing output did little to support the case for a Fed taper as the figures showed only a modest rise and contracts to buy previously owned homes in the US slid the most in more than three years. The two data points indicate that the US’ economy was on rocky footing even before the government shutdown in October.
In other news around the markets:
- After the US government surprisingly revealed that the NSA had been spying on about 35 world leaders, German officials warned of consequences. However, Germany could be the least of the US’ problems as nations around the world are demanding to know whether or not their leaders were included in those tapped. The disclosure of US spying activities has proven to be a strain on US foreign relations.
- Although Apple’s iPhone sales increased in its September quarter, the company’s profit slid and disappointed investors. The company’s shares fell on Monday following the release of the earnings report. With the holiday season coming up investors will be looking to see if the company’s cheaper iPhone 5C will gain momentum.
- South Korea’s recent nuclear scandal, in which 23 reactors were taken offline when it was discovered that they were operating with fake safety certificates, has put pressure on the nation to shift away from relying n nuclear power. If the country does decide to replace nuclear power, the project will likely cost tens of billions of dollars a year due to increased imports.
- The first major deadline for Syria to turn over its chemical weapon supply is in danger of being missed. The group charged with overseeing the destruction process has warned that it may not be able to visit all of the Syrian production and storage sites by the Friday deadline. Security problems are keeping inspectors from examining the last two of Syria’s chemical weapons sites.
Asian markets sagged on Tuesday, with China’s Shenzhen composite posting the largest loss, down 1.45 percent. The Japanese NIKKEI was down 0.49 percent, Indonesia’s JSX composite lost 0.66 percent and Australia’s ASX 200 lost 0.48 percent.
European markets were quiet, the UK’s FTSE was up 0.07 percent and the eurozone’s STOXX 600 was unchanged. Italy’s MIB was off to a rocky start, down 0.24 percent.
Energy futures were lower on Tuesday, Brent futures lost 0.56 percent and WTI futures were down 0.35 percent. Gold gained 0.10 percent but silver was down 0.30 percent. Industrial metals mostly higher with aluminum up 0.74 percent and zinc up 0.66 percent.
The dollar was treading water ahead of the Federal Reserve meeting and the euro to dollar ratio was steady just below $1.38. The pound lost 0.22 percent to the dollar and the yen climbed 0.13 percent against the American currency. The Australian dollar was down 0.62 percent against the greenback.
Notable earnings released on Monday included:
- Merck & Company, Inc. (NYSE: MRK) reported third quarter EPS of $0.92 on revenue of $11.03 billion, compared to last year’s EPS of $0.95 on revenue of $11.49 billion.
- Apple Inc. (NASDAQ: AAPL) reported EPS of $8.26 on revenue of $37.50 billion, compared to last year’s EPS of $8.67 on revenue of $35.97 billion.
- Biogen Idec Inc. (NASDAQ: BIIB) reported third quarter EPS of $2.35 on revenue of $1.83 billion, compared to last year’s EPS of $1.91 on revenue of $1.39 billion.
- Herbalife LTD. (NYSE: HLF) reported third quarter EPS of $1.41 on revenue of $1.21 billion, compared to last year’s EPS 0f $1.04 on revenue of $1.02 billion.
Stocks moving in the premarket included:
- ConAgra Foods Inc. (NYSE: CAG) gained 0.47 percent in premarket trade after gaining 1.51 percent on Monday.
- Johnson & Johnson (NYSE: JNJ) gained 0.23 percent in premarket trade after choppy trading over the past week took the stock up 1.30 percent.
- United States Steel Corp (NYSE: X) lost 1.70 percent in premarket trade after falling 2.46 percent over the past week.
- Bank of America Corp (NYSE: BAC) lost 0.21 percent in premarket trade after falling 2.00 percent over the past five days.
Earnings reports expected on Tuesday include:
- Nokia Corporation (NYSE: NOK) is expected to report third quarter EPS of $0.00 on revenue of $7.83 billion, compared to last year’s loss of $0.09 per share on revenue of $9.05 billion.
- Valero Energy Corporation (NYSE: VLO) is expected to report EPS of $1.03 on revenue of $31.77 billion, compared to last year’s EPS of $1.90 on revenue of $34.73 billion.
- Aetna Inc. (NYSE: AET) is expected to report third quarter EPS of $1.53 on revenue of $12.89 billion, compared to last year’s EPS of $1.55 on revenue of $8.90 billion.
- Johnson Controls, Inc. (NYSE: JCI) is expected to report third quarter EPS of $0.95 on revenue of $10.96 billion, compared to last year’s EPS 0f $0.77 on revenue of $10.39 billion.
Economic releases expected on Tuesday include US consumer confidence, US retails sales, US PPI, British mortgage lending and mortgage approvals and Germany’s consumer climate.
Happy trading and good luck!
For a recap of Monday’s market action, click here.
Tune into Benzinga’s pre-market info show with Dennis Dick and Joel Elconin here.
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