The stock markets in the United States fluctuated after the Federal Reserve released the meetings of its meeting indicating that policy makers were concerned regarding risks towards financial stability. The Nasdaq ended the trading day with a small gain while the Down Jones Industrial Average (DJIA) and the S&P 500 declined today.
The minutes of the Federal Reserve showed that policymakers perceived diminishing economic benefits from its monthly bond-buying program when they took the first move to taper. Policy makers were also concerned regarding the possibility of “excessive risk-taking in the financial sector.” There is no definite schedule regarding the planned reduction of bond purchases, but some officials expressed the need for a more “deterministic path.”
In a telephone interview with Bloomberg, John Manley, chief equity strategist at Wells Fargo Fund Management said, “The market wants quick and easy answers. I don’t think the Fed minutes made exactly clear which way the Fed is going, because the Fed does not yet know which way to go. The Fed will respond to the economy.”
Economists surveyed by Bloomberg projected that the Federal Reserve will reduce its $85 billion bond buying program by $10 billion increments over its next seven meetings before stopping it eventually in December.
Ian Stannard, head of European foreign-exchange strategy at Morgan Stanley in London opined, “The Fed is going to continue to push the message of moderate tapering, but I think they will provide a very bullish outlook for the economy.”
Meanwhile, the ADP Research Institute reported that U.S. companies added 238,000 jobs last month compared with the 200,000 additional jobs estimated by economists polled by Bloomberg. The Department of Labor is scheduled to publish the unemployment rate and jobs report on Friday.
“After the better than expected ADP number, the expectations for the jobs report on Friday are rising and that has caused the spike in yield. Unless we get a very strong report it will be tough to move much higher in yields. We are buyers of dips at these levels,” commented Gabriel Mann, a U.S. government-bond strategist at RBS Securities, a unit of Royal Bank of Scotland Group plc (NYSE:RBS) (LON:RBS).
U.S. Markets
- Dow Jones Industrial Average (DJIA)- 16,462.16 (-0.42%)
- S&P 500- 1,837.49 (-0.02%)
- NASDAQ- 4,165.61 (+0.30%)
- Russell 2000- 1,155.20 (-0.21%)
European Markets
- EURO STOXX 50 Price EUR- 3,110.6 6 (-0.01%)
- FTSE 100 Index- 6,721.78 (-0.50%)
- Deutsche Borse AG German Stock Index DAX- 9,497.84 (-0.08%)
Asia Pacific Markets
- Nikkei 225- 16,121.45 (+1.94%)
- Hong Kong Hang Seng Index- 22,965.29 (+1.25%)
- Shanghai Shenzhen CSI 300 Index- 2,241.91 (+0.17%)
Stocks in Focus
The stock price of Forest Laboratories, Inc. (NYSE:FRX) rallied almost 18% to $69.29 per share after the company announced its agreement to acquire Aptalis, a private company specializing in Gastrointestinal and Cystic Fibrosis for $2.9 billion in cash. The company said the acquisition is expected to be accretive to its EPS by approximately $0.78 by FY2015 and estimated to achieve $125 million in synergies by 2016.
Micron Technology, Inc. (NASDAQ:MU) gained more than 9% to $23.87 per share after the company posted better than expected first quarter revenue. The company reported $4.04 billion revenue, an increase of 42% from its revenue in the fourth quarter and 120% higher than its results in the same quarter last year. Its net income was $358 million or $0.30 per diluted share.
The stock value of Riverbed Technology, Inc. (NASDAQ:RVBD) rose more than 9% to $19.53 per share after Paul Singer’s hedge funds submitted a proposal to buy the company for $19 per share. Elliot said its offer is compelling and attractive to the shareholders of Riverbed Technology, and a ‘go shop’ provision was included in its proposed merger agreement to allow the board to seek higher proposals from competitors.
