The minutes of the previous meeting of the Federal Open Market Committee (FOMC) showed that Chairman Ben Bernanke proposed reducing the $85 billion quantitative easing or bond purchases program of the government by the end of the year. The other officials of the Federal Reserve are comfortable with the Bernanke’s proposal. A majority of economists projected that the Fed would taper the bond-buying program as early as September.
In a telephone interview with Bloomberg, Ken Croft, president of Croft Leominster, opined that the Feds showed minimal difference with the generally held expectations of economists regarding the reduction of the quantitative easing. He said, “It looks like it’s not too much different than what people are looking for regarding the tapering. Low rates have been the norm for so long now that just anything different causes some people angst, but in our mind, it’s a positive thing that we have the ability to start tapering. It means the economy is getting better.”
As investors evaluate the minutes of the FOMC’s previous meeting, stock markets in the United States declined. Another factor that contributed to the sell off is the poor earnings performance of some the retailers such as Staples, Inc (NASDAQ:SPLS) and Target Corporation (NYSE:TGT).
- Dow Jones Industrial Average (DJIA)- 14, 897 (-0.70%)
- S&P 500- 1,642 (-0.58%)
- NASDAQ- 3,599 (-0.38%)
- Russell 2000- 1,021 (-0.68%)
- EURO STOXX 50 Price EUR- 2,774 (-0.48%)
- FTSE 100 Index- 6,390 (-0.97%)
- Deutsche Borse AG German Stock Index DAX- 8,285 (-0.18%)
Asia Pacific Markets
- Nikkei 225- 13, 424 (+0.21%)
- Hong Kong Hang Seng Index- 21, 817 (-0.69%)
- Shanghai Shenzhen CSI 300 Index- 2, 308 (-0.17%)
Stocks in focus
The stock price of Staples, Inc. (NASDAQ:SPLS) declined by more than 15% to $14.27 per share after the company reported lower than expected second quarter financial results and reduced its profit outlook for fiscal 2013. The company posted $104 million income or $0.16 diluted earnings per share (EPS) compared with $125 million income or $0.19 diluted EPS in the same period a year ago. Staples cut its FY13 earnings outlook to $1.21 to $1.25 per share.
Target Corporation (NYSE:TGT) declined, ended the trading day at &65.52 per share, a decline of 3% after the company reported weak earnings results. Target suffered a 13% decline in earnings to $611 million or $0.95 per share. During the same period a year earlier, the company generated $704 million or $1.06 EPS. The company provided a cautious outlook for the rest of the year because it believes that consumers continue to face ongoing household budget pressure.
The stock value of Lowe’s Companies, Inc. (NYSE:LOW) gained by almost 4% to $45.79 per share after the company reported strong financial results for the second quarter that outperforms the consensus estimates of Wall Street analysts. The company also raised its earnings guidance due to the recovery of the housing market. The company posted $0.88 earnings per share on $15.7 billion revenue.
Incyte Corporation (NASDAQ:INCY) climbed by more than 33% to $36.04 per share after the company revealed that the Phase 2 study for its Jakafi inhibitor demonstrated positive outcomes to cure patients with pancreatic cancer. The drug maker is confident that Jakafi would be able to provide a larger long-term opportunity for Incyte based on the result of the study.