Stocks declined worldwide today as investors grow cautious about
the Fed's policy decision.
Today, the Federal Open Market Committee begins its two-day
meeting. Chairman Ben Bernanke will hold a press conference on its
outcome tomorrow at 2:30 p.m. It is widely believed among investors
and economists that the Fed will begin the infamous "taper" this
month. Currently, the central bank buys $85 billion in
mortgage-backed securities and government bonds. Expectations that
it will cut that back by a token amount this month are high, but
Bernanke has repeatedly said that scaling back monetary stimulus
depends on continued improvement of economic indicators. The
disappointing August jobs report, and downward revisions of
previous months' job growth, could keep the Fed on a dovish track.
Adding to the dovish case, inflation stayed low last month. The
consumer price index rose 0.1% month-over-month in August, missing
expectations of a 0.2% rise.
The NAHB homebuilder survey will come out later this morning.
Economists expect the index to stay steady at 59 in September,
signifying a small decline in homebuilders' outlook on the market.
Stock futures were largely flat this morning following declines on
Asian and European indices. Before the opening bell,
(INDEXDJX:.DJI) futures were up 0.01% at 15,432. Futures contracts
(INDEXSP:.INX) fell 0.03% to 1,690.70 and
(INDEXNASDAQ:.IXIC) futures gained 0.02% to 3,161.50. Gold was down
just 0.01% at $1,317.70/oz. Treasuries rose, and the 10-year yield
fell two basis points to 2.84%.
German investor confidence rose this month, according to the ZEW
Survey. The index climbed 7.6 points to 49.6 this month on improved
outlook for the Eurozone. European car sales fell in August
however, sinking 4.9% from the year before.
) shares were off slightly this morning as the megabank was forced
to admit wrongdoing in last year's "London Whale" debacle that cost
it $6 billion. The bank will pay $800 million in fines to US and UK
government agencies to settle questions of whether it misled
shareholders about trading risks. In a reversal of regulators'
policy, the bank was actually forced to admit fault. This is much
more than symbolic, as it exposes JPMorgan to private lawsuits.
) will reportedly make a huge vote of confidence in Linux today.
The enterprise tech company will spend $1 billion to convince
customers that the open-source operating system is a better choice
for powering enterprise data centers. The benefit to Linux is that
since it is free and open source, a data center can install it on
any number of cloud instances it wishes without paying license fees
for installing competing products such as
) Windows Server.
Though Linux servers, usually with support from companies such as
), have been growing fast, it still only claims 23% of new server
purchases, where Windows Server has 49%. In the year ending June
30, Microsoft earned $8.1 billion on $20.3 billion from its server
and tools division. Servers make up a larger share of the company's
earnings than the Windows division.
) shares could see some action today before the company reports
earnings after the bell. Analysts expect the software company to
report per-share earnings of $0.34 on $1.01 billion in revenue.