Futures surge on Fed decision
The Federal Reserve surprised markets by keeping its stimulus measures intact.
The U.S. Federal Reserve announced at the end of its two-day meeting Wednesday it will continue with its $85 billion per month stimulus plan until economic data paint a more stable picture of the U.S. economy.
The news sent markets soaring; Treasury bonds had their largest price rally in a single day since November 2011, with 10-year yields closing at 2.706%. The Dow Jones Industrial Average ($INDU) closed at an all time high, up 0.9%, and the S&P 500 ($INX) was up 20.76 points, a new record.
In other news around the markets:
With one year left for the European banking rescue program, eurozone banks are beginning to push for a new plan that will continue to ease the pain of the region's financial crisis. The European Central Bank has lent about 1 trillion euros into the region's banks, but as the maturity of those loans approaches many worry that banks in struggling countries like Italy and Spain will fail if left to stand on their own. Now, banks are lobbying for another round of ECB loans in 2014, before the original loans mature in 2015.
The Securities and Exchange Commission has proposed a new rule that would require companies to disclose the gap between employee salaries and chief executives' pay. Republican lawmakers and some regulators have criticized the rule, saying that those details don't provide information about a company's financial health and simply shame chief executives.
Bank of Japan member Takahide Kiuchi stated Thursday the country was not in need of further stimulus at the moment. He said that the planned sales tax hike is not expected to have a huge impact on the Japanese economy in the long term, and that the bank will consider further easing only if the economy is affected by a severe shock.
Sharp Corp announced on Wednesday that it was planning to raise up to $1.67 billion through a share issuance and investments from its business partners. Over the past year, Sharp has dealt with shaky finances, and the new funds are expected to help ease some of the pressure on its balance sheet. The additional cash has been earmarked for investment in new facilities in Asia, liquid-crystal displays for smartphones and research and development for growth segments like robotics and health care.
Asian markets were up on Thursday. The NIKKEI gained 1.80%, and the Hang Seng index was up 1.67%. The Indonesia's JSX composite had the largest gains, up 4.93%, and New Zealand's NZ50 and Australia's ASX 200 grew by 1.05% and 1.10% respectively.
European markets benefited from the Fed's decision to maintain its stimulus. The UK's FTSE was up 1.38%, and the STOXX 600 was up 1.11%. France's CAC 40 was up 1.21%, the German DAX grew 1.27%, and the Spanish IBEX gained 1.19%.
Commodity markets were on a high with news of the continued Fed stimulus. Brent futures were up 0.07%, and WTI futures gained 0.51%. Gold jumped 4.91% to $1,317.80 per ounce, and silver gained 7.17% to $23.11 per ounce. Industrial metals were also up across the board. Copper gained 1.83%, and aluminum was up 0.42%.
The dollar sank against the euro losing 0.30%, but gained 0.97% against the yen and 0.37% against the pound. The dollar also lost 2.54% to the rupee.
Earnings reported Wednesday
Notable companies that reported earnings on Wednesday included:
Oracle (ORCL) reported earnings per share of $0.59 on revenue of $3.38 billion, compared to last year's earnings per share of $0.53 on revenue of $8.21 billion.
FedEx (FDX) reported earnings per share of $1.53 on revenue of $11.00 billion, compared to last year's earnings per share of $1.45 on revenue of $10.79 billion.
General Mills (GIS) reported earnings per share of $0.70 on revenue of $4.37 billion, compared to last year's earnings per share of $0.66 on revenue of $4.05 billion.
Stocks moving in the premarket included:
Procter & Gamble (PG) continued its upward climb and gained 0.60% in premarket trade on Thursday.
Berkshire Hathaway (BRK.B) benefited from the Fed's decision and gained 0.39% in premarket trade.
National Oilwell Varco (NOV) lost 10.39% in premarket trade after gaining nearly a percentage point over the past five days.
Oracle (ORCL) lost 2.30% in premarket trade after its earnings report showed an 8% rise in profit and a weak outlook.
Verizon Communication (VZ) was down 0.84% in premarket trade after complaints about connectivity to the company's high-speed LTE network.
Notable companies expected to report earnings on Thursday include:
ConAgra Foods (CAG) is expected to report earnings per share of $0.45 on revenue of $4.38 billion, compared to last year's earnings per share of $0.44 on revenue of $3.31 billion.
IHS (IHS) is expected to report earnings per share of $1.18 on revenue of $468.48 million, compared to last year's earnings per share of $0.99 on revenue of $385.61 million.
Pier 1 Imports (PIR) is expected to report earnings per share of $0.21 on revenue of $404.23 million, compared to last year's earnings per share of $0.19 on revenue of $367.62 million.
Rite Aid (RAD) is expected to report a loss of $0.04 per share on revenue of $6.27 billion, compared to last year's loss of $0.05 per share on revenue of $6.23 billion.
Economic releases on Thursday include initial and continuing jobless claims, existing home sales, and current account data from the U.S. British retail sales and the Swiss National Bank's interest rate decision are also due out.
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