Federal Reserve Vice Chairwoman Janet Yellen’s cautious comments caused markets to breathe a sigh of relief as she suggested that the US still had a long way to go before the bank begins to taper its stimulus spending.
Yellen said the US economy was still underperforming and that the US central bank still has “more work to do." Her comments sent US share markets as well as Asian stocks soaring and put pressure on the dollar. Many believe that she could change the Fed’s current threshold for the jobless rate from 6.5 percent to six percent or below.
On Thursday, Yellen will appear before the Senate for a confirmation hearing to become the next Federal Reserve Chairman.
In other news around the markets:
GDP data from Japan showed the nation’s economy slowed down, but less than expected in the third quarter. The figures showed a 0.5 percent expansion from July to September, lower than the 0.9 percent growth seen in the second quarter, but higher than analysts had predicted.
Cisco Systems said the US government’s spying scandal is having a negative impact on the company’s revenue. The company said its revenue could fall up to 10 percent this quarter, and continue to fall until mid 2014. In emerging markets like China, Cisco saw a massive drop in sales after Edward Snowden leaked information about US surveillance, most of which took place through internet data.
Both Germany and France reported worse than expected GDP data in the third quarter, which added to evidence that the bloc’s recovery was wobbly. German GDP increased by just 0.3 percent from July to September, significantly less than the 0.7 percent growth the nation saw in the second quarter. The French economy contracted 0.1 percent unexpectedly, after expanding 0.5 percent in the second quarter.
Two of the eurozone’s nationalist leaders have formed an alliance to help their anti-euro, anti-immigration movement gain momentum. France’s Marine Le Pen and the Netherlands’ Geert Wilders have joined forces ahead of spring elections and are working to rope in other nationalist parties from Austria and the UK.
Asian markets were on a high with the Japanese NIKKEI up 2.12 percent and Indonesia’s JSX composite up 1.52 percent. China’s Shanghai composite rose 0.60 percent and the Shenzhen composite was up 0.99 percent.
European Markets
European markets were also higher with the UK’s FTSE up 0.82 percent and the eurozone’s STOXX 600 up 0.60 percent. The German DAX gained 0.81 percent and France’s CAC 40 rose 0.75 percent.
Energy futures were mixed with Brent futures up 0.39 percent but WTI futures down 0.17 percent. Precious metals were higher with gold up 1.15 percent and silver up 1.46 percent. Industrial metals were mixed with aluminum down 0.28 percent and tin up 0.55 percent.
The euro lost 0.38 percent against the dollar and the pound fell 0.30 percent against the dollar. The dollar gained 0.75 percent against the yen and 0.69 percent against the Australian dollar.
Earnings
Notable earnings released on Wednesday included:
Cisco Systems, Inc. CSCO reported first quarter EPS of $0.53 on revenue of $12.09 billion, compared to last year’s EPS of $0.48 on revenue of $11.88 billion.
Macy’s Inc. M reported third quarter EPS of $0.47 on revenue of $6.28 billion, compared to last year’s EPS of $0.36 on revenue of $6.08 billion.
NetApp, Inc. NTAP reported third quarter EPS of $0.66 on revenue of $1.55 billion, compared to last year’s EPS of $0.51 on revenue of $1.54 billion.
Stocks moving in the Premarket included:
Johnson & Johnson JNJ gained 0.17 percent in premarket trade after ending the day on Wednesday with at 0.24 percent loss.
Morgan Stanley MS rose 0.17 percent in premarket trade after gaining 3.16 percent over the past week.
General Motors GM gained 0.13 percent in premarket trade after jumping 4.86 percent on Wednesday.
Hewlett-Packard HPQ lost 2.04 percent in premarket trade after rising 3.44 percent over the past week.
Earnings reports expected on Thursday include:
Wal-Mart Stores, Inc. WMT is expected to report third quarter EPS of $1.13 on revenue of $116.75 billion, compared to last year’s EPS of $1.08 on revenue of $113.93 billion.
Kohl’s Corporation KSS is expected to report third quarter EPS of $0.86 on revenue of $4.55 billion, compared to last year’s EPS of $0.91 on revenue of $4.49 billion.
Nordstrom, Inc. JWN is expected to report third quarter EPS of $0.66 on revenue of $2.87 billion, compared to last year’s EPS of $0.71 on revenue of $2.81 billion.
Economics
US data will dominate Thursday’s economic calendar with the nation releasing oil inventory data, initial and continuing jobless claims and retail sales. European releases will include eurozone GDP, British retail sales and the ECB’s monthly report.
For a recap of Wednesday’s market action click here.
Tune into Benzinga’s pre-market info show with Dennis Dick and Joel Elconin here.
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