U.S. stocks are little-changed this morning after surging to a
record high yesterday.
European shares are rallying by 1 percent to 2 percent, led by
higher-risk countries such as Spain and Italy. Asia was mostly
higher in the overnight session, with Japan and Australia rallying
sharply while China continues to struggle.
The S&P 500 rose 1.66 percent to a new closing higher of 1810
yesterday after the Federal Reserve announced that it would reduce
asset purchases by $10 billion to $75 billion a month. While it
might appear bearish on the surface, the move resulted from an
improving economy and had been expected for months. Policymakers
also suggested that monetary conditions will remain accommodative
long into the future.
Financials rallied on the news and may stand to gain the most from
the statement because the short-term Fed funds rate is expected to
remain near zero. At the same time, fewer bond purchases will let
longer-term rates rise, increasing the yield curve and bank
market scanner also shows an emerging trend of strength in
homebuilders and related companies such as building materials and
real-estate services. Most of those stocks have struggled this year
because of higher interest rates, but recent data including housing
starts, building permits, and the NAHB sentiment index have shown
improving conditions in the industry.
Today is the last session with an active calendar before Christmas
next Wednesday. Initial jobless claims come out at 8:30 a.m. ET,
followed at 10 a.m. ET by the Philadelphia Federal Reserve's
regional economic index and existing home sales. Nike, Red Hat, and
Cintas issue quarterly results this afternoon.
In company-specific news, Rite Aid is down about 10 percent on weak
guidance for 2014. ConAgra, Accenture, and Oracle rose on strong
quarterly results, and AK Steel is climbing almost 8 percent after
forecasting a profitable fourth quarter.
Gold fell 2 percent and silver is sliding 4 percent on the Fed
news. Both appear to be at risk of breaking down to new multi-year
lows. Copper also declined half a percent. Energy is modestly
higher, led by a 1.5 percent gain in natural gas. Most agricultural
products are also posting small gains. Currencies are