The stock markets in the United States recorded another decline after the minutes of the previous meeting by the Federal Reserve policymakers suggested the possibility of tapering its $85 billion monthly bond-buying program over the next few months.
During the meeting of the Federal Open Markets Committee (FOMC) in October, policymakers observed that the economy is growing moderately, and they discussed various strategies to communicate the Fed’s guidance in the future clearly.
Based on the FOMC minutes, some of the policymakers support a unified message of laying the groundwork for the reduction of the monthly quantitative easing (QE) while focusing on the overall position that monetary policy will remain highly accommodative as needed to meet the objectives of the committee.
The FOMC is considering the proper timing and procedure of implementing the tapering without driving interest rates higher, which could slow down economic growth. The minutes of the meeting indicated that policymakers “generally expected that the data would prove consistent with the committee’s outlook for ongoing improvement in labor market conditions and would thus warrant trimming the pace of purchases in coming months.”
In a phone interview, Quincy Krosby, market strategist at Prudential Financial Inc told Bloomberg, “The market’s trying to decide what it means. Some investors were concerned that there was talk of tapering beginning sooner rather than later.”
On the other hand, Peter Tchir, founder of TF Market Advisors commented that the minutes of the FOMC are data-dependent and aim to address the confusion among investors regarding its planned stimulus reduction. He said, “The data, whatever quality we ascribe to it, has been better and tapering is allegedly back on the table. But almost everyone thought that back in September and the Fed surprised us by keeping the floodgates open.”
- Dow Jones Industrial Average (DJIA)- 15, 900.82 (-0.41%)
- S&P 500- 1,781.37 (-0.36%)
- NASDAQ- 3,921.27 (-0.26%)
- Russell 2000- 1,098.38 (-0.27%)
- EURO STOXX 50 Price EUR- 3,047.32 (-1.06%)
- FTSE 100 Index- 6,681.08 (-0.25%)
- Deutsche Borse AG German Stock Index DAX- 9,202.07 (+0.10%)
Asia Pacific Markets
- Nikkei 225- 15, 076.08 (-0.33%)
- Hong Kong Hang Seng Index- 23,700.86 (+0.18%)
- Shanghai Shenzhen CSI 300 Index- 2, 424.85 (+0.53%)
Stocks in Focus
The stock price of Lowe’s Companies, Inc. (NYSE:LOW) declined 6.15% to $47.65 per share after the company’s third quarter earnings missed the estimates of Wall Street analysts. The company posted $0.47 earnings per share, one cent lower than the $0.48 earnings per share consensus estimate. Its full year earnings guidance of $2.15 per share was also lower than $2.19 per share projected by analysts.
J.C. Penney Company, Inc. (NYSE:JCP) gained 8.38% to $9.44 per share despite the lackluster financial results of the embattled department store chain. Investors were encouraged with the progress of the company in its efforts to turn around its business. The company generated $2.78 billion revenue and posted $1.81 losses per share (GAAP) during the third quarter. J.C. Penney emphasized that same store sales in October were up 0.9% and its monthly sales results improved during the quarter.
The stock value of Yahoo! Inc. (NASDAQ:YHOO) climbed 2.86% to $35.62 per share after the company revealed its plan to return more capital to shareholders, and to sell $1 billion worth of convertible debt that will mature in 2018.