Stocks higher before the Fed report


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Stocks are inching higher this morning as investors await the Federal Reserve's monetary announcement this afternoon.

S&P 500 futures are up more than 0.1 percent but have weakened in the last two hours. European markets are rallying by more than 0.5 percent. Asia was mostly higher in the overnight session, led by a 2 percent gain in Tokyo as the Japanese yen weakened and investors anticipated news of further economic reforms. India's Sensex also rallied more than 1 percent after the country's central bank refrained from hiking interest rates.

The S&P 500 has been holding its ground after a pullback last week, though price action has been increasingly bullish as investors favor cyclical areas like small caps and industrials. Our proprietary researchLAB market scanner also shows emerging strength in semiconductor and computer-hardware names in the last week.

The Fed's announcement comes at 2 p.m. ET, and attention will focus on when the central bank will reduce monetary stimulus. While few economists anticipate a reduction today, a CNBC poll published yesterday shows their expectations moving closer in the last two months. While on the surface bearish, such a step has been thoroughly discussed since the spring and would result from a strong economy rather than rising inflation. So it's not clear how investors would react.

Other items on today's calendar including housing starts at 8:30 a.m. ET and crude-oil inventories at 10:30 a.m. ET. The Mortgage Bankers Association already reported that home-loan applications fell to their lowest level in more than 12 years, hurt by about interest rates before the Fed's announcement.

In company-specific news, FedEx and General Mills are down about 2 percent on weak quarterly reports. Lennar rose 3 percent after the homebuilder's results beat expectations and orders continued to increase. Jabil Circuit is cratering 17 percent after guidance trailed estimates by a wide margin.

Commodities are little-changed. Oil is flat, precious metals are slightly higher, copper fell half a percent, and agricultural products are mixed. The weak yen is the main story in foreign-exchange markets, with few other currencies making big moves. 

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.

This article appears in: Investing Options
Referenced Stocks: SPX

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