Chinese markets were down heavily overnight following a sharp drop-off in foreign direct investment. Chinese foreign direct investment, a major part of the country's GDP, fell to a 0.6% annual rate in August from 24.1% in the month prior. Other Asian markets were stable. Japanese Prime Minister Shinzo Abe said at a Merrill Lynch investor conference that investors should "buy" Japan.
Volume was understandably light today ahead of tomorrow's FOMC meeting. Shares traded on all US exchanges totaled 9.2 billion shares versus the 9.66 billion 15-day average. The S&P 500 (INDEXSP:.INX) meandered 0.42% higher, led by consumer discretionary and tech stocks. Materials stocks lagged as both crude oil and precious metals finished down on the day.
The US saw $31.1 billion of foreign net purchases of US Treasuries in July, in large part due to inflows from Japan. Japanese private and public sources purchased a net total of $52 billion during the month. August consumer prices rose 1.5% from a year ago, down from a 2.0% rate last month. Core prices ex food and energy rose to a 1.8% annual rate from 1.7%. The NAHB's survey of builder sentiment was unchanged at an index reading of 58. The prior month's reading was revised down to 58 from 59.
Microsoft ( MSFT ) announced a new $40 billion share buyback program and increased its quarterly dividend to $0.28 from $0.22. Microsoft rose 5% in the pre-market but closed up only 0.42%. Additionally, Jefferies reported an enormous drop in fixed income revenues for its quarter ended August 31. Leucadia ( LUK ), which acquired Jefferies in March of this year, was down 3% after the report.
Tomorrow's Financial Outlook
Tomorrow afternoon, the Federal Reserve will make its monthly monetary policy decision. At the meeting, it is highly expected that the central bank will trim its asset purchases by either $10 billion or $15 billion. Chairman Ben Bernanke will hold a press conference 30 minutes after the decision to help explain the reasoning behind the Fed's actions. August housing starts and building permits are scheduled to be released in the morning. Economists expect that starts will increase to a 921K annual rate and that permits will increase to a 950K annual rate.
China's August property prices are due out overnight. Other market-moving news expected to be released includes minutes from the Bank of England's meeting earlier this month and Switzerland's ZEW survey on economic expectations.
The first major earnings report is due out tomorrow morning. Economic bellwether FedEx ( FDX ) is scheduled to report before the market opens. Other reports tomorrow include Oracle ( ORCL ) and General Mills ( GIS ).