The stock markets in the United States fluctuated and eventually ended the trading session lower today as data showed a decline in the housing market and the Federal Reserve is set to change its guidance for the direction of interest rates due to the improvement of the employment situation in the country.
Today, the Department of Commerce reported that the construction of new residential houses declined in January. Building permits dropped 16% to a seasonally adjusted annual rate (SAAR) of 880,000 from December, but were 2% higher compared in January 2013. Economists surveyed by Bloomberg predicted 950,000 new residential houses.
During the last meeting of the Federal Reserve under former Chairman Ben Bernanke, policy makers decided to reduce the monthly bond purchased to $65 billion due to economic improvement.
Policymakers are set to provide clarity regarding their plan to continue to support the economy with low interest rates and declining bond-buying program as the unemployment rate dropped to 6.6%, the lowest rate since October 2008.
“Participants agreed that, with the unemployment rate approaching 6.5 percent, it would soon be appropriate for the Committee to change its forward guidance in order to provide information about its decisions regarding the federal funds rate after that threshold was crossed,” according to the minutes of the meeting of the Federal Open Markets Committee (FOMC).
In a telephone interview with Bloomberg, James Dunigan, chief investment officer at PNC Wealth Management opined that the Fed will maintain low interest rates for a certain period. According to him, “It’s a continued positive indicator for the support of equity markets going forward. They’ve been pretty clear that rates are going to be low for a while.”
On the other hand, Erik Davidson, deputy chief investment officer at Wells Fargo Private Bank commented, “So far tapering seems to be orderly and they seem to be committed to it. While it is data-dependent, it is long-term data dependent, certainly not short-term, noise data-dependent. Investors should recognize that this is the beginning of a very long process.”
U.S. Markets
- Dow Jones Industrial Average (DJIA)- 16,040.56 (-0.56%)
- S&P 500- 1,828.75 (-0.65%)
- NASDAQ- 4,237.95 (-0.82%)
- Russell 2000- 1,149.05 (-1.07%)
European Markets
- EURO STOXX 50 Price EUR- 3,120.80 (+0.11%)
- FTSE 100 Index- 6,796.71 (+0.00%)
- Deutsche Borse AG German Stock Index DAX- 9,660.05 (+0.00%)
Asia Pacific Markets
- Nikkei 225- 14,766.53 (-0.52%)
- Hong Kong Hang Seng Index- 22,664.52 (+0.34%)
- Shanghai Shenzhen CSI 300 Index- 2,308.66 (+1.15%)
Stocks in Focus
The shares of Eli Lilly & Co. (NYSE:LLY) gained more than 5% to $58.07 per share after the pharmaceutical company reported that its lung treatment, Ramucirumab, met the primary goal of the phase 3 trial of patients with non-small cell lung cancer.
The stock price of Garmin Ltd. (NASDAQ:GRMN) rose 9% to as much as $52.72 per share after the maker of navigation systems posted better than expected financial results. The company delivered $0.76 adjusted earnings per share in $759.7 million revenue for the fourth quarter compared with the consensus estimate of $0.62 earnings per share on $712.78 million revenue.
The stock price of Zale Corporation (NYSE:ZLC) surged more than 40% to $20.90 per share after the company entered a definitive agreement to sell itself to Signet Jewelers Ltd. (NYSE:SIG) for $21 per share. The shares of Signet also jumped more than 18% to $93.65 per share today.
