The Federal Reserve will begin its two day meeting today, at
which most are expecting to see the bank begin to taper its
stimulus program by $10 to $15 billion and maintain current
The Fed is also expected to reiterate its forward guidance, with
a 6.5 percent unemployment threshold. Besides the size of the
taper, investors will be focused on the bank's forecast of interest
rates in 2016 as it will provide insight about the pace of future
In other news around the markets:
Lawrence Summers' withdrawal from the race to lead the Federal
Reserve has left Federal Reserve Vice Chairwoman Janet Yellen as
the front runner. Although President Obama hasn't made a decision
yet, no new candidates have been added for consideration. A
nomination from the president isn't expected until next week at the
earliest. On Monday, the United Nations released a report on the
chemical attack in Syria which the White House has said adds to
evidence that the attack was carried out by the Syrian government.
Although the purpose of the report was not to assign blame,
officials say several of the UN inspectors' findings point to the
Syrian government's involvement. In light of the new information,
the US has renewed a push for harsh punishments for Damascus if it
does not follow the UN's disarmament plan. Minutes have been
released from the Reserve Bank of Australia's policy meeting which
indicated that the bank is open to cutting rates in the future if
need be. The bank's members said the drop in mining investment and
the subdued outlook for non-mining investment is still weighing on
the country's growth prospects. Although a rate cut is not
imminent, the RBA members agreed not to close the door on the
possibility in the future. In Italy, support for Silvio Berlusconi
and his political party is falling according to polls. The Italian
newspaper, La Republica, showed that Berlusconi's People of Liberty
party had fallen to 26.2 percent, behind the center-left party.
Berlusconi's decline in popularity could help extinguish his
threats to take down the government. European stocks tumbled on
Tuesday after UK Financial Investments Ltd. sold a 6 percent or 3.2
billion pound stake in Lloyds. The big move sparked a sell off and
caused markets to pull back.
Asian markets slid with the Fed taper looming. The Shanghai
composite was down 2.05 percent and the Shenzhen composite lost
1.56 percent. The Japanese Nikkei was down 0.65 percent. The
region's FTSE Asia 100 index was down 0.81 percent.
European markets began the day on their back foot with losses
across the board. The UK's FTSE was down 0.36 percent and the
Eurozone's STOXX 600 lost 0.45 percent. The Spanish IBEX lost 0.90
percent and Italy's MIB was down 0.71 percent.
Brent futures were down 0.40 percent and WTI futures lost 0.62
percent. Metals were mostly higher, Gold was up 0.08 percent,
silver gained 0.10 percent, copper was up 0.67 percent but aluminum
lost 0.45 percent.
The euro gained 0.11 percent against the dollar and the pound
was up 0.15 percent against the dollar. The yen lost 0.18 percent
against the dollar and climbed again towards the 100 yen to one
dollar mark. The Australian dollar was flat against the greenback
and the rupee lost 0.25 percent against the dollar.
Notable Earnings Reported on Monday:
Cvent, Inc. (NYSE:
) reported second quarter EPS of $0.04 on revenue of $26.90
million, compared to expected EPS of $0.05 on revenue of $26.80
Stocks moving in the pre-market included:
Carnival Corp (NYSE:
) gained 0.94 percent in pre-market trade after the company's Costa
Concordia cruise ship was pulled upright after crashing into the
Italian coastline last year. Kellogg Co (NYSE:
) was down 0.71 percent in pre-market trade after gaining 1.19
percent over the past five days. Visa Inc. (NYSE:
) lost 0.46 percent in pre-market trade after MasterCard announced
that it was joining the "Better Than Cash Alliance" on Monday.
Notable earnings expected on Tuesday include:
Adobe Systems Incorporated (NASDAQ:
) is expected to report EPS of $0.34 on revenue of $1.01 billion,
compared to last year's EPS of $0.58 on revenue of $1.08 billion.
Tower Group, Inc. (NASDAQ:
) is expected to report a loss of $0.52 per share on revenue of
$421.10 million, compared to last year's loss of $0.34 per share on
revenue of $417.61 million.
Economic releases expected on Tuesday include New Zealand and
the eurozone's current account, US CPI, eurozone and German ZEW
economic sentiment, as well as British PPI and CPI.
Good luck with your Tuesday trades!
For a recap of Monday's market action, click
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