By Anora Mahmudova and Barbara Kollmeyer, MarketWatch Staples,
Lowe's shares rise in wake of results
NEW YORK (MarketWatch) -- U.S. stocks drifted lower on
Wednesday, as investors seemed reluctant to make big bets ahead of
minutes of the latest Federal Open Market Committee meeting that
could offer insights into policy makers' thinking.
The S&P 500 (SPX) and the Dow Jones Industrial Average (DJI)
retreated from their record levels reached on Tuesday. The Nasdaq
Composite (RIXF) edged lower.
There were some bright spots, especially among retailers after
upbeat results from Lowe's Cos. and Staples Inc.
Colin Cieszynski, chief market strategist at CMC Markets, thinks
the minutes may have a big influence on the trading session.
"The street took the meeting statement as an indication that the
Fed was shifting to a more hawkish tone. This was also seen in how
the previous two hawkish dissenters were brought back into the fold
and a dovish dissenter emerged. Traders may react to any clues to
when US interest rate increases may start, particularly if there is
any reason to change the broad expectation of a mid-2015 first rate
increase," Cieszynski wrote in emailed comments.
In economic news, construction started on new U.S. homes fell in
October, led down by volatile apartment construction. However,
construction starts for single-family homes rose to hit the highest
pace since November 2013. The headline number was slightly below
forecasts and market reaction ahead of the opening bell was
muted.
"Every nuance will be pored over, but the basic question is
whether the FOMC will vote for rate hikes as long as the economic
recovery continues, or only if signs of inflation appear?" said Kit
Juckes, global macro strategist at Société Générale, in a note. How
to read the Fed's stiff upper lip on inflation
If the current 3%-plus momentum in U.S. real GDP growth
continues into 2015, Juckes believes rates will rise next year,
though he notes the markets' "collective position is
indecisive."
"All in all, the key will be in whether the minutes rubber-stamp
the edging up in hawkishness or whether [they] will throw the doves
an olive branch," said Jim Reid, strategist at Deutsche Bank, in a
note.
Retail names report: Home improvement and office-goods retailing
sectors rolled out earnings early, and so far, so good. Lowe's
(LOW) shares rose after the home-improvement retailer lifted its
sales outlook and beat forecasts with its results.(LOW) Staples
(SPLS) gained after its earnings.Target (TGT) shares surged after
earnings release.
La-Z-Boy Inc. (LZB) continued to rise after the furniture maker
beat Wall Street expectations late Tuesday. Jack in the Box Inc.
(JACK) shares also rose on a gain in sales.
TransCanada Corp. (TRP) shares rose even as the Senate last
night narrowly rejected a bill to approve the construction of the
company's Keystone XL oil pipeline.
Bank of Japan, Bank of England weigh in: The dollar(USDJPY) hit
fresh seven-year highs against the yen, shooting past Yen117. The
Bank of Japan on Wednesday stuck to maintaining its large-scale
easing policy and its upbeat assessment of the economy despite
downbeat economic -growth figures that prompted Prime Minister
Shinzo Abe to delay a tax increase and call early elections. Read:
Potential crises make the dollar the place to be
The Nikkei 225 fell 0.3% in its first chance to react since Abe announced the plans.
In the U.K., meanwhile, minutes of the Bank of England's
rate-setting Monetary Policy Committee's November policy meeting
hinted at deepening divisions and concerns from some members that
the U.K. could overshoot its inflation target. The FTSE 100 index
pulled back slightly while some European stocks managed modest
gains.
Oil prices(CLZ4) remained rangebound, while gold (GCZ4) ticked
down, falling just below $1,200 an ounce.
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