Dow Futures Rise Ahead Of Fed Taper Statement

LONDON — Stock index futures at 7am ET indicate that the Dow Jones Industrial Average (DJINDICES: ^DJI) may open up by 0.10% this morning, while the S&P 500 (SNPINDEX: ^GSPC) may open up by 0.11%. The CNN Fear & Greed Index remains neutral, and is set to open at 54, after closing at 50 yesterday.

Both Asian and European markets moved higher this morning ahead of today’s Fed announcement, which is due at 2pm ET, after European markets close. In Spain, bad loans hit a new all-time record of 12%, despite the formation of a bad bank earlier this year, while in the UK, the minutes from the Bank of England’s September monetary policy committee meeting showed that the committee voted unanimously to leave the Bank’s asset purchase scheme unchanged this month, and believe that the eurozone recovery is looking stronger than expected. At 7am ET, the FTSE 100 was up 0.13%, the DAX was up 0.50%, and the CAC 40 was up 0.53%.

Today’s US economic reports are likely to be overshadowed by the Federal Reserve announcement at 2pm ET, followed by Fed Chairman Ben Bernanke’s press conference at 2.30pm. Analysts’ consensus forecasts remain in favour of a $10bn reduction in monthly bond purchases, which would take the monthly total from $85bn to $75bn, but it is uncertain how this reduction would be split between Treasury bonds and mortgage-backed securities, both of which the Fed currently purchases each month. Other economic data due today that could affect future Fed decisions includes August’s housing starts report at 8.30am, which is expected to show that new starts rose to 921,000 last month, up from 896,000 in July. Also at 8.30am, August’s building permits report is expected to show a small rise to 955,000, up from 954,000 in July.

Companies due to report their latest quarterly earnings before markets open include General Mills, which reported first-quarter earnings of $0.70 per share earlier this morning, and FedEx Corp, which is expected to report first-quarter earnings of $1.50 per share. Cracker Barrel Old Country Store is also scheduled to report before the open, while Oracle is due to report after tonight’s close, and is expected to report first-quarter earnings of $0.56 per share. Adobe Systems is 4.4% higher in pre-market trading and may rise when markets open, after it reported strong growth in online users.

Finally, let’s not forget the Dow's daily movements can add up to some serious long-term gains. Indeed, Warren Buffett recently wrote: "The Dow advanced from 66 to 11,497 in the 20th Century, a staggering 17,320% increase that materialized despite four costly wars, a Great Depression and many recessions."

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> Roland does not own shares in any of the companies mentioned in this article.