Markets at a Glance
(Data as of approximately 5 p.m. ET)
LAST CHANGE % CHG
DJIA 16906.62 98.13 0.58%
Nasdaq 4362.84 25.6 0.59%
S&P 500 1956.98 14.99 0.77%
Japan: Nikkei 225 15115.8 144.89 0.97%
Hang Seng 23181.72 -21.87 -0.09%
Shanghai Composite 2055.52 -11.18 -0.54%
S&P BSE Sensex 25246.25 -274.94 -1.08%
Australia: S&P/ASX 5382.7 -18 -0.33%
UK: FTSE 100 6778.56 11.79 0.17%
PRICE CHG YIELD%
U.S. 2 Year 2/32 0.452
U.S. 5 Year 11/32 1.675
U.S. 10 Year 18/32 2.586
Australia 10 Year -9/32 3.743
China 10 Year 0/32 4.1
India 10 Year -5/32 8.67
Japan 10 Year -1/32 0.594
German 10 Year 8/32 1.377
LAST (MID) CHANGE
Australia $ (AUD/USD) 0.9403 -0.0007
Yen (USD/JPY) 101.92 0.01
S. Korean Won (USD/KRW) 1023.3 0.84
Chinese Yuan (USD/CNY) 6.2321 0.0009
Euro (EUR/USD) 1.3591 -0.0005
WSJ Dollar Index 73.07 0.02
LAST CHANGE % CHG
Crude Oil 106.14 -0.22 -0.21%
Brent Crude 114.25 0.8 0.71%
Gold 1277.9 5.9 0.46%
SNAPSHOT:
U.S. stocks rallied, sending the S&P 500 to a record close,
after Federal Reserve Chairwoman Janet Yellen offered an upbeat
outlook for the U.S. economy. Treasury prices rose, gold held
steady and the dollar fell. U.S. oil prices fell on supply data,
while Brent continued to rise on concerns about Iraqi oil
supplies.
OPENING CALL:
Asian markets may follow U.S. markets higher after U.S. Federal
Reserve' officials nudged up their projections for short-term
interest rates in 2015 and 2016 but slightly reduced their outlook
for interest rates in the longer-run. Investors in Asia will also
get a reading on New Zealand's GDP. The country's economy has been
firing on all cylinders lately, leading the Reserve Bank of New
Zealand to raise interest rates at its past three meetings - a
stark contrast to its peers in other developed markets, who are
mostly keeping rates at all-time lows.
EQUITIES:
The S&P 500 closed at a record after Federal Reserve
Chairwoman Janet Yellen offered an upbeat outlook for the U.S.
economy.
Stocks rallied in late trading as Ms. Yellen said the U.S.
economy is showing signs of strength after a dismal first quarter.
The Fed announced a $10 billion reduction in the central bank's
bond-buying program, as widely expected. And while officials
trimmed long-term forecasts for economic growth, their projections
for short-term interest rates in 2015 and 2016 rose slightly.
"The broad pattern is pretty clear...the economy is
strengthening," said Seth Masters, chief investment officer of
AllianceBernstein's private-client arm, which manages $70 billion.
"It's a good thing for stocks."
While stock-market valuations have risen above long-term
averages, Mr. Masters thinks stocks are still "reasonably
attractive." "You're getting a fair deal," he said.
In her news conference, Ms. Yellen said that stock prices
broadly aren't outside of historical norms. The S&P 500 is
currently trading at 15.5 times its expected earnings for the next
12 months, above its 10-year average of 13.9.
Price moves in other markets were largely subdued. After some
back-and-forth, Treasury prices rose, pushing bond yields lower.
The dollar fell against major currencies after the Fed disappointed
investors who anticipated an accelerated schedule for raising
interest rates.
Anthony Valeri, investment strategist at LPL Financial, said the
Fed's projections "reinforce the idea that it will hold rates lower
for longer, a boost to both stocks and bonds."
Asian markets were mixed Wednesday, with China's Shanghai
Composite falling 0.5% and Japan's Nikkei Stock Average rising
0.9%.
FOREX:
The dollar fell against major currencies after the Federal
Reserve disappointed investors who had expected a shift to tighter
monetary policy and an accelerated schedule for the first increase
in interest rates since the 2007-08 financial crisis.
After its two-day meeting, the Federal Open Market Committee
said it would reduce its bond purchases by another $10 billion a
month in July, to $35 billion, a move that most investors expected.
The monthly bond-purchase program, created to hold down long-term
interest rates and stimulate the economy, has weighed on the
dollar.
In addition, the central bank forecast the federal-funds rate,
currently near zero, would reach 1.2% by the end of next year and
2.5% by the end of 2016, which pointed to slightly faster
tightening over the next two years than formerly expected.
But its forecast didn't move up timing for the first
interest-rate increase of the series, something some investors had
hoped for, as many had lined up long bets for the dollar ahead of
the FOMC meeting. Higher interest rates would make the dollar more
attractive to investors, as it would increase returns on
dollar-denominated assets.
"Nothing in the Fed statement will help dollar bulls," said
Chris Gaffney, senior vice president and director of sales at
EverBank World Markets.
In her news conference following the FOMC meeting, Federal
Reserve Chairwoman Janet Yellen said no formula was in place for
when the central bank would start to raise short-term interest
rates. "It depends on how the economy progresses," Ms. Yellen
said.
The euro, beleaguered since the European Central Bank announced
measures designed to stimulate the economy and battle extremely low
inflation, rose against the dollar after Ms. Yellen's comments.
BONDS:
Treasury bonds strengthened along with a rally in stocks as the
latest interest-rate projections from the Federal Reserve reassured
investors that low interest rates could stay low for longer.
Analysts said bond prices got a further boost from comments from
Fed Chairwoman Janet Yellen during a press conference after the
conclusion of the two-day policy meeting. Ms. Yellen reiterated
that the central bank expects to keep interest rates near zero for
a considerable time to support the economy.
The U.S. central bank said in a statement that it will further
reduce its monthly bond buying by $10 billion to $35 billion, a
decision widely expected by investors and economists.
But it was the Fed's interest-rate forecasts that drew
investors' attention.
On average, Fed officials projected the benchmark federal funds
rate would hit 1.2% by the end of 2015 and 2.5% by the end of 2016,
up from averages of 1.125% in 2015 and 2.4% in 2016 when the Fed
last projected rates in March.
The marginally higher projections briefly generated some selling
in the bond market. But buyers stepped in as focus shifted to the
Fed's forecast on interest rates longer term. Fed officials on
average said the target interest rate could settle in at 3.75%,
down from earlier forecasts of 4%, over the longer run.
COMMODITIES:
U.S. oil prices fell on data that crude supplies shrank less
than expected last week, while Brent, the international benchmark,
continued to rise on concerns about Iraqi oil supplies.
The price gap between the two was at its widest since
mid-May.
U.S. oil supplies declined 579,000 barrels last week, compared
with an average Wall Street Journal survey estimate for stocks to
fall 1.1 million barrels on the week.
Refiners didn't process as much oil into gasoline and other
products as analysts had expected. Refining capacity utilization
fell 0.8 percentage point to 87.1% of capacity, its lowest since
late March, compared with expectations for the operating rate to
rise by 0.8 percentage point.
Several refineries were still undergoing planned maintenance
last week and others experienced unplanned outages. The return of
those refineries "should result in an increase in runs showing up
in the data next week," said Mike Tran of CIBC World Markets in a
note.
Supplies in Cushing, Okla., a key storage hub and the delivery
point for the Nymex contract, rose by 200,000 barrels to 21.4
million barrels.
Cushing stocks have fallen rapidly in recent months as a new
pipeline shipped oil out of storage to refineries along the Gulf
Coast. As inventories dropped from 41.8 million barrels in the week
ended Jan. 24 to 21.2 million barrels in the week ended June 6,
prices climbed amid concerns that supplies at the delivery point
would reach such low levels that it would be difficult to pump oil
out of storage tanks.
Meanwhile, Brent prices rose to a fresh nine-month high on
concerns that violence in Iraq could threaten the country's oil
production.
In the metals market, gold prices held near steady after the
Federal Reserve's monetary policy statement came in line with
market expectations. While gold prices tumbled and then jumped in
the few minutes directly following the statement, the market
stabilized nearly unchanged as investors sifted the documents.
TODAY'S HEADLINES:
Fed Raises Projections for Rates in 2015, 2016
Federal Reserve officials nudged up their projections for
short-term interest rates in 2015 and 2016 but slightly reduced
their outlook for interest rates in the longer-run. The Fed said it
would wind down its bond buying by another $10 billion.
Iraqi Forces Battle for Control of Oil Refinery
Iraq's counterterrorism units were battling insurgents for
control of the country's main oil refinery, trying to keep the fuel
hub from falling to a powerful week-old offensive by Sunni Muslim
militants.
Argentina Will Negotiate With Creditors
Argentina will negotiate with holdout creditors over its
defaulted bonds, a lawyer representing the country said, in a
potential breakthrough that sent government bonds surging because
it could prevent another default.
Amazon.com Unveils 'Fire Phone' Smartphone
Amazon.com unveiled its long-awaited smartphone, thrusting it
into the highly competitive handset market. The Fire Phone boasts a
4.7-inch screen, a 13 megapixel camera and earphones that resist
tangling.
GM Rejected Worker's Warning on Impala Switch
A General Motors employee warned in 2005 that the auto maker had
a "serious safety problem" with the ignition switches used on the
2006 Impala, but the company didn't recall the vehicles until early
this week.
FedEx Earnings Rise; Ambitious Targets Set
FedEx Corp. posted impressive 4Q earnings of $730 million, or
$2.46 a share, and set ambitious targets for the new year despite
major challenges at its express business caused by lackluster
global trade.
Valeant Launches Tender Offer for Allergan
Valeant Pharmaceuticals launched its tender offer for Allergan,
taking its roughly $53 billion bid for the Botox maker directly to
shareholders after being rebuffed repeatedly by Allergan's
board.
GE CEO to Meet French Minister on Alstom Deal
GM CEO Jeffrey Immelt is set to meet Economy Minister Arnaud
Montebourg in Paris on Thursday, the third time since GE launched
its $17 billion bid for the French engineering firm's business.
Apple Unveils Lower-Priced Entry-Level iMac
Apple introduced a new entry-level model of its iMac computer
that drops the starting price for the all-in-one desktop line by
$200 but comes with a slower processor and less hard-drive
space.
IRS Issues New Rules for Offshore Accounts
The IRS is making it easier for U.S. taxpayers who inadvertently
failed to comply with laws on reporting income or assets abroad to
avoid penalties. But it is also sharply raising the potential fines
on tax cheats who don't come forward.
RECENT DJ DOMINANTS:
BlackRock, Pimco Funds Sue Deutsche Bank, U.S. Bank Over Trustee
Roles
Health-Care Software Maker PointClickCare Weighing IPO
OPEC May Bring Forward Next Meeting if Iraq Crisis Disrupts
Exports
HSBC Signs Deal to Provide First UKEF-backed Loan in
Renminbi
S Africa's Finance Minister Sees Strikes Weighing on Growth
TODAY'S CALENDAR:
(Times in GMT, followed by country and event)
2100 SKA May PPI
2245 NZ Q1 GDP
0130 AUS May Foreign Exchange Transactions and Holdings of
Official Reserve Assets
0130 AUS Jun RBA Bulletin
0430 JPN Apr All Industry Index
0500 JPN May Steel Production
0500 JPN Apr Indexes of Business Conditions - Revision
0500 JPN Apr Indexes of Business Conditions - Revision
0800 PHI Philippine Monetary Policy meeting & decision
0830 HK Apr External Merchandise Trade: Volume & Price
Statistics
0830 UK May UK monthly retail sales figures
0830 UK May CML mortgage lending figures
0830 UK May Capital issuance
1000 UK Jun CBI Monthly Industrial Trends Survey
1230 US U.S. Weekly Export Sales
1230 US 06/14 Unemployment Insurance Weekly Claims Report -
Initial Claims
1230 CAN Apr Employment Insurance
1300 EU Eurogroup Meeting of eurozone finance ministers
1345 US Bloomberg Consumer Comfort Index
1400 US May Leading Indicators
1400 US Jun Philadelphia Fed Business Outlook Survey
1400 US 06/07 DJ-BTMU U.S. Business Barometer
1430 US 06/13 EIA Weekly Natural Gas Storage Report
2030 US Foreign Central Bank Holdings
2030 US Money Stock Measures
2030 US Federal Discount Window Borrowings