U.S. Stocks Are Little Changed Before Fed Statement
<cite class="byline" style="margin: 0px; padding: 0px; border: 0px; outline: 0px; font-size: 11px; vertical-align: baseline; background-color: transparent; width: 640px; color: rgb(111, 111, 111); display: block; font-style: normal; line-height: 1.3em; position: static !important; background-position: initial initial; background-repeat: initial initial;">By Inyoung Hwang & Nick Taborek - Sep 18, 2013 10:25 PM GMT+0800</cite>
U.S. stocks were little changed, with the Standard & Poor’s 500 Index trading near its record high, as investors awaited a Federal Reserve announcement on the prospects for monetary stimulus.
FedEx Corp. (FDX) rose 3.1 percent after earnings topped estimates as the operator of the world’s largest cargo airline reduced costs. Dollar Tree Inc. gained 2.6 percent after adopting a $2 billion buyback program. Adobe Systems Inc. rallied 6.8 percent as the largest maker of graphic-design tools said it amassed more than 1 million customers for its online services.
The S&P 500 fell less than 0.1 percent to 1,704.06 at 10:23 a.m. in New York. The benchmark index climbed yesterday to within five points of its all-time high of 1,709.67 reached on Aug. 2. The Dow Jones Industrial Average declined 24.50 points, or 0.2 percent, to 15,505.23 today. Trading in S&P 500 stocks was 15 percent below the 30-day average at this time of day.
“Fed tapering seems to be priced in,” Stephane Ekolo, chief European strategist at Market Securities in London, said in an interview. “Most investors expect the Fed to scale back in its monthly bond purchases, a reduction in the corridor of $5 billion to $15 billion.”
The Federal Open Market Committee wraps up a two-day policy meeting today. Analysts are divided on the amount by which the Fed will scale back its monthly asset purchases. Among 64 economists surveyed by Bloomberg News, 33 predict it will reduce its buying of Treasuries by $5 billion or less, with 31 forecasting a cut of $10 billion or more.
Stimulus Program
The central bank’s stimulus program has helped the S&P 500 (SPX) rally more than 150 percent from its March 2009 low. Speculation over the future of quantitative easing has whipsawed global asset prices since May, when Chairman Ben S. Bernanke first signaled cuts may start in 2013. The S&P 500 tumbled 5.8 percent from a record on May 21 through June 24. It rebounded 8.7 percent to close at its latest record last month, then slumped as much as 4.6 percent before climbing again.
The FOMC releases both its policy statement and forecasts for economic growth, inflation andunemployment at 2 p.m. Washington time. Bernanke will hold a press conference half an hour later.
Housing starts rose 0.9 percent to a 891,000 annual rate, following the prior month’s 883,000 pace that was weaker than previously estimated, a Commerce Department report showed today in Washington. The median estimate of 83 economists surveyed by Bloomberg called for 917,000. Permits dropped 3.8 percent to a 918,000 pace, showing little momentum heading into this month.
Volatility Index
The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX (VIX), rose 1 percent to 14.53. The equity volatility gauge has tumbled 15 percent in September after rallying 26 percent in August, the biggest monthly gain since May 2012.
Technology shares had the biggest gain out of 10 groups in the S&P 500, increasing 0.5 percent. Apple Inc. jumped 2.1 percent to $464.85. Hewlett-Packard Co. climbed 0.6 percent to $21.79.
FedEx rallied 3.1 percent to $114.15. The company, regarded as an economic bellwether because of the variety of goods it ships globally, began taking steps last year to reduce costs by $1.7 billion as customers opt for cheaper shipping. FedEx is parking older planes sooner, trimming capacity to Asia and eliminating 3,600 jobs through buyouts.
Dollar Tree added 2.6 percent to $57.29. The discount-store operator said its board authorized $2 billion in equity repurchases. The Chesapeake, Virginia-based company also said it agreed with JPMorgan Chase & Co. to buy back $1 billion in shares under a variable maturity accelerated program.
Web Subscribers
Adobe climbed 6.8 percent to $51.39. The number of Web subscribers jumped 47 percent in the fiscal third quarter, even as sales and profit declined.
The results are validating the strategy of Chief Executive Officer Shantanu Narayen to push the maker of Photoshop and Illustrator software deeper into Internet services. While that’s crimping near-term revenue and profit, the transition to a suite of online tools called Creative Cloud positions Adobe for more predictable growth in the future, according to Josh Olson, an analyst at Edward Jones & Co.
Cracker Barrel Old Country Store Inc. fell 3.5 percent to $103.24. The restaurant chain forecast 2014 sales of $2.7 billion to $2.75 billion. Analysts estimate annual revenue of $2.75 billion.
To contact the reporters on this story: Inyoung Hwang in London at [email protected]; Nick Taborek in New York at [email protected]
To contact the editors responsible for this story: Andrew Rummer at [email protected]; Lynn Thomasson at [email protected]
