Dow Futures Rise On Yellen News

LONDON — Stock index futures at 7am ET indicate that the Dow Jones Industrial Average (DJINDICES: ^DJI) may open up 0.28% this morning, while the S&P 500 (SNPINDEX: ^GSPC) may open up 0.37%. Stock futures turned positive following news that President Obama is expected to nominate Janet Yellen to be the next Fed chair later today, in the expectation that she will be likely to continue the dovish policies supported by the current chair, Ben Bernanke. CNN’s Fear & Greed Index has fallen into the extreme fear zone, and is expected to open at 21 this morning, after closing at 27 yesterday.

European markets were broadly positive this morning, although the FTSE 100 remained flat at 7am ET, following news that UK industrial output fell unexpectedly by 1.1% in August. Elsewhere, the continuing US political deadlock prevented any major gains, following President Obama’s statement that he will only negotiate with the Republicans once they agree to end the current government shutdown. At 7am ET, the FTSE 100 was unchanged, the DAX was up 0.17%, and the CAC 40 was up 0.57%.

Today’s wholesale inventories report for August, due at 10am ET, is expected to be delayed by the government shutdown, although the minutes from September’s meeting of the Federal Open Markets Committee are expected to be published on time at 2pm, and will be closely examined by investors for further clues as to the Fed’s future intentions for its $85bn monthly bond-buying programme.

Today’s corporate earnings may prove to be of more interest. Earlier this morning, Costco Wholesale reported fiscal fourth-quarter earnings of $1.40 per share, while Family Dollar Stores reported fiscal fourth-quarter earnings of $0.86 per share, up by 15% from the same period last year.

Alcoa climbed 3.3% in pre-market trading and is likely to open higher this morning, after the aluminium firm reported earnings of $0.11 per share after the close last night, beating analysts’ consensus forecast of $0.06 per share. Last night’s other big name reportee, Yum! Brands, was down by 7.2% before markets opened this morning, and the firm’s stock is likely to fall after it missed earnings forecasts and reported third-quarter earnings of $0.85 per share, along with adjusted guidance suggesting that fast food sales in China will be slow to recover.

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.