#PreMarket Primer: Wednesday, October 30: Markets Hope For A Mild Day
US markets have been operating on the assumption that the US Federal Reserve will continue with its bond buying plan until March of 2014.
With the Fed meeting to come to a close on Wednesday afternoon, most are hoping the bank won’t have any surprises in store. The recent rallies in stocks and bonds would be justified by the bank’s decision to delay a taper; however if the bank does make any sudden moves then markets will be very vulnerable.
In other news around the markets:
- After reports leaked by Edward Snowden showed that the NSA had been collecting phone calls in both France and Spain, European politicians angrily pointed fingers at the US. However, new information shows that European intelligence had collected the data and shared it with the US. The revelation will likely ignite anger among Europeans who believed the spying was done solely by the US.
- The Nasdaq Composite froze up for almost an hour on Tuesday due to data transmission problems at Nasdaq OMX Group. Exchange officials are blaming human error rather than computer problems for the outage, but the incident still raised questions about the stability of electronic market systems.
- The New Zealand Dollar was hit hard after Moody’s Vice President Steven Hess said the agency considered cutting New Zealand’s credit rating from AAA. Hess cited the nation’s reliance on overseas investors as well as its current account deficit as reason to worry that the country could be more vulnerable to external problems.
- Angela Merkel is set to hold another round of coalition talks with the Social Democrats on Wednesday. The meeting will likely center around implementing a nationwide minimum wage of €8.50 per hour. The new wage would increase salaries for about 20 percent of the nation’s workforce, but could have a negative impact on job growth.
Asian markets were higher on hopes that the Fed would continue its bond buying plan. The Japanese NIKKEI was up 1.23 percent, the Shanghai composite gained 1.48 percent and the Shenzhen composite was up 1.73 percent. The Hang Seng Index had the largest gains, up 2.00 percent.
European markets were off to a good start, the UK’s FTSE was up 0.63 percent and the eurozone’s STOXX 600 gained 0.61 percent. The Spanish IBEX gained 1.11 percent and Italy’s MIB was up 1.16 percent.
Energy futures were mixed with Brent futures quiet, up 0.09 percent but WTI futures down 0.59 percent. Gold gained 0.17 percent and silver was up 0.95 percent. Industrial metals were mixed with copper up 1.16 percent but aluminum down 0.63 percent.
Ahead of the Fed meeting outcome, the euro gained 0.10 percent on the dollar and the pound was up 0.13 percent against the American currency. The yen lost 0.05 percent against the dollar and the Australian dollar gained 0.39 percent against the greenback.
Notable earnings released on Tuesday included:
- Pfizer, Inc. (NYSE: PFE) reported third quarter EPS of $0.58 on revenue of $12.60 billion, compared to last year’s EPS of $0.53 per share on revenue of $13.98 billion.
- Valero Energy Corporation (NYSE: VLO) reported EPS of $0.57 on revenue of $36.14 billion, compared to last year’s EPS of $1.90 on revenue of $34.73 billion.
- Aetna Inc. (NYSE: AET) reported third quarter EPS of $1.50 on revenue of $13.04 billion, compared to last year’s EPS of $1.55 on revenue of $8.90 billion.
- Johnson Controls, Inc. (NYSE: JCI) reported third quarter EPS of $0.95 on revenue of $11.05 billion, compared to last year’s EPS 0f $0.77 on revenue of $10.39 billion.
Stocks moving in pre-market trade included:
- McDonald’s Corp (NYSE: MCD) gained 0.50 percent in premarket trade after gaining nearly 1 percent over the past week.
- Berkshire Hathaway Inc. (NYSE: BRKB) rose 0.40 percent in premarket trade after gaining 0.40 percent on Tuesday
- Edwards Lifesciences Corp (NYSE: EW) lost 2.02 percent in premarket trade after falling 10.57 percent over the past five days.
- United States Steel Corp (NYSE: X) fell 1.06 percent in premarket trade after rising 8.75 percent on Tuesday.
Earnings reports expected on Wednesday include:
- Facebook, In. (NASDAQ: FB) is expected to report third quarter EPS of $0.18 on revenue of $1.89 billion, compared to last year’s EPS of $0.12 per share on revenue of $1.26 billion.
- Comcast Corporation (NASDAQ: CMCSA) is expected to report EPS of $0.61 on revenue of $16.25 billion, compared to last year’s EPS of $0.46 on revenue of $16.54 billion.
- Visa Inc. (NYSE: V) is expected to report third quarter EPS of $1.85 on revenue of $3.02 billion, compared to last year’s EPS of $1.54 on revenue of $2.73 billion.
- Marriott International (NYSE: MAR) is expected to report third quarter EPS of $0.45 on revenue of $3.05 billion, compared to last year’s EPS of $0.44 on revenue of $2.73 billion.
The Federal Reserve interest rate decision and press conference will be the most important item on Wednesday’s economic calendar. Other notable releases expected include US oil inventory data, US CPI, German CPI, the German unemployment rate, the Spanish unemployment rate, and eurozone consumer confidence.
Happy trading and good luck!
For a recap of Tuesday’s market action, click here.
Tune into Benzinga’s #PreMarket info show with Dennis Dick and Joel Elconin here.
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