The stock markets in the United States gained modestly as investors continue to evaluate corporate earnings and anticipate that the Federal Reserve will taper its bond-buying program based on its statement yesterday.
According to economists at Barclays Plc (NYSE:BCS) (LON:BARC) and Citigroup Inc (NYSE:C), the statement of the policymakers indicated the possibility that they would reduce the quantitative easing (QE) as early as December. Citigroup said the chances for a potential tapering in January next year increased from 25% to 45%. Based on the survey conducted by Bloomberg on October 17-18, economists are projecting that the Fed will start tapering in March.
In a telephone interview with Bloomberg, Andres Garcia-Amaya, global market strategist of the mutual funds unit at JPMorgan Chase & Co. (NYSE:JPM) said, “The Fed was a little bit more hawkish than people expected, not a lot, but incrementally more hawkish.” She went on to say, “Once they do start tapering, the market will start trading more on fundamentals, and fundamentals look fairly resilient.”
Meanwhile, Alexandra Walker-Ott, equity fund manager at Swiss & Global Management Ltd projected a healthy market correction soon. He added that company outlooks remain quite cautious and people are pricing strong earnings accelerations over the next quarters. He said the “market isn’t cheap anymore” and she expects “inevitable downgrades to expectations.”
Dow Jones Industrial Average (DJIA)- 15, 619.53 (0.00%)
S&P 500- 1,764.34 (-0.49%)
NASDAQ- 3,933.61 (0.06%)
Russell 2000- 1,105.85 (0.03%)
EURO STOXX 50 Price EUR- 3,067.95 (0.90%)
FTSE 100 Index- 6,731.43 (-0.68%)
Deutsche Borse AG German Stock Index DAX- 9,039.92 (0.26%)
Asia Pacific Markets
Nikkei 225- 14,327.94 (-1.20%)
Hong Kong Hang Seng Index- 23,206.37 (-0.42%)
Shanghai Shenzhen CSI 300 Index- 2, 373.72 (-1.40%)
Stocks in Focus
The stock price of Avon Products, Inc. (NYSE:AVP) declined 21.61% to $17.56 per share after reporting $0.01 losses per share compared with an $0.08 earnings per share in the same period a year ago. The company’s revenue declined by 7% to $2.32 billion. The company also revealed that that regulators proposed terms of potential settlements related to the investigation that some of its former employees in China and other countries bribed officials, which violated the Foreign Corrupt Practices Act. However, the company said the monetary penalties were significantly higher than the $12 million it offered to settle the case.
Computer Sciences Corporation (NYSE:CSC) dropped 4.53% to $49.26 per share after indicating that the Securities and Exchange Commission (SEC) is widening its investigation against its former executives to include some of its current employees in the United States. The company received a Wells Notice from the commission that it might recommend an enforcement action.
The stock value of Expedia Inc (NASDAQ:EXPE) surged 18% to $58.97% after the online travel agent reported better-than-expected earnings for the third quarter. The company gained $1.43 earnings per share, higher than the $1.36 earnings per share consensus estimate of Wall Street analysts.
Meanwhile, JDS Uniphase Corp (NASDAQ:JDSU) declined by 11.25% to $13.0 a share after Jefferies analyst James Kisner lowered his rating for the stock from Buy to Hold.