Stocks are set for a third straight day of losses after a
landmark speech by Ben Bernanke and a surprise increase in retail
sales last month.
Retail sales unexpectedly rose 0.4% last month after staying flat
from August to September. Economists forecast that amidst the
government shutdown, retail sales would have been flat. Even
excluding autos and gas, sales rose 0.3%, also beating
expectations. The consumer price index showed that deflation still
persists. Month-over-month CPI fell 0.1%, though economists
expected no change.
Still to come today is a report on existing home sales. The
annualized pace of pre-owned-home sales in October is projected to
fall to 5.13 million. We will also get the minutes from the last
meeting of the Federal Open Markets Committee for more clues
regarding the Fed's reasoning about quantitative easing and the
state of the US economy.
US stock index futures were mostly flat this morning.
(INDEXDJX:.DJI) futures fell 0.03% to 15,929 while
(INDEXSP:.INX) futures were down 0.03% to 1,784.70. Futures on the
(INDEXNASDAQ:.IXIC) gained 0.10% to 3,379.00.
Yesterday, Fed Chairman Ben Bernanke gave a speech to the National
Economists's Club where he discussed how the Fed manages market
reactions. He said that the target rate will be near zero even
after quantitative easing ends, and that the market misinterpreted
the FOMC's statements over the summer.
"When, ultimately, asset purchases do slow, it will likely be
because the economy has progressed sufficiently for the Committee
to rely more heavily on its rate policies, the associated forward
guidance, and its substantial continued holdings of securities to
maintain progress toward maximum employment and to achieve price
stability," he said. "In particular, the target for the federal
funds rate is likely to remain near zero for a considerable time
after the asset purchases end, perhaps well after the unemployment
threshold is crossed and at least until the preponderance of the
data supports the beginning of the removal of policy
"A perceived reduction in the Fed's commitment to meeting its
objectives -- contributed to the increase in yields, it was neither
welcome nor warranted, in the judgment of the FOMC. This change in
expectations did not correspond to any actual lessening in the
FOMC's commitment or intention to provide the high degree of
monetary accommodation needed to meet its objectives, as Committee
participants emphasized in subsequent communications," he said.
Yesterday, as expected,
) paid $13 billion to end probes into its sales of questionable
mortgage bonds, but admitted no wrongdoing. This is a massive boon
to the bank, as an admission of misleading investors or fraud would
have been a bloody shirt for prosecutors in other ongoing suits to
wave. JPMorgan is not yet off the hook for numerous private
lawsuits and criminal investigations.
) reported losses of $1.81 per share, missing expectations by
$0.09. Same-store sales were down 4.8% and revenue fell to $2.78
billion. However, its forward guidance was better than expected.
Management expects comparable-store sales to grow sequentially and
year-over-year in the fourth quarter. Shares were up 7.9% in the
) jumped 2.5% this morning as the company added $5 billion to its
share buyback program. Since January of 2012, Yahoo has already
repurchased $5.3 billion in its own stock.