MARKETS AT A GLANCE
LAST CHANGE % CHG
DJIA 17935.7 31.26 0.17%
Nasdaq 5064.88 9.33 0.18%
S&P 500 2100.44 4.15 0.20%
Japan: Nikkei 225 20219.3 -38.67 -0.19%
Hang Seng 26753.8 187.09 0.70%
Shanghai Composite 4967.9 80.47 1.65%
S&P BSE Sensex 26832.7 146.15 0.55%
Australia: S&P/ASX 5595.4 59.6 1.08%
UK: FTSE 100 6680.55 -29.55 -0.44%
PRICE CHG YIELD%
U.S. 2 Year 2/32 0.657
U.S. 5 Year 6/32 1.622
U.S. 10 Year -1/32 2.317
Australia 10 Year 4/32 3.003
China 10 Year 13/32 3.66
India 10 Year 0/32 8.035
Japan 10 Year 6/32 0.481
German 10 Year -3/32 0.813
LAST(MID) CHANGE
Australia $ (AUD/USD) 0.7752 0.0002
Yen (USD/JPY) 123.38 -0.05
S. Korean Won (USD/KRW) 1116.93 1.43
Chinese Yuan (USD/CNY) 6.2093 -0.0003
Euro (EUR/USD) 1.134 0.0002
WSJ Dollar Index 85.8 -0.01
LAST CHANGE % CHG
Crude Oil 59.76 -0.21 -0.35%
Brent Crude 64.49 0 0.00%
Gold 1183.7 2.8 0.24%
(Data as of approximately 5 p.m. ET)
SNAPSHOT:
Stocks and bonds gained, the dollar weakened and gold prices rose as the Federal Reserve signaled that interest rates would increase more slowly than many investors had been expecting. Oil prices ended little changed, recovering from a selloff after disappointing U.S. stockpile data.
OPENING CALL:
Bank Indonesia's Board of Governors is scheduled to issue its monetary policy decision Thursday. The central bank is between a rock and a hard place. The slowdown in the Asian region's economies, marked by a sharp drop in Chinese demand for Indonesia's commodities, is holding the domestic economy back. But because of the country's wide current-account deficit, this downturn is hurting the rupiah -- to the extent that it risks creating financial turmoil. Against that threat, the central bank can't afford to cut rates further, however much producers might want it to.
EQUITIES:
U.S. stocks ended slightly higher after the Federal Reserve signaled that interest rates could increase more slowly than officials had expected.
As in recent sessions, stock-market volume was lighter than average, with just 6.1 billion shares exchanging hands.
The forecasts released by the Fed showed most officials expect to begin raising short-term interest rates before the end of the year. But Fed officials lowered their interest-rate forecasts for 2016 and 2017 by a quarter percentage point, suggesting they've become less certain about the strength of the U.S. economy in the longer run.
The Fed characterized economic growth as moderate in its statement. In the news conference, Chairwoman Janet Yellen reaffirmed that the decision to raise rates will be dependent on incoming economic data.
"The growth is positive, but not so positive that the rate hikes have to happen in a knee-jerk fashion," said Joe Spinelli, head of single stock trading for the Americas at Deutsche Bank. "The slower the Fed moves...the market will view that as bullish for equities," he added.
U.S. stocks have rallied since the financial crisis, driven in part by the Fed's easy-money policy. The S&P 500 has more than tripled since March 2009. But concerns about elevated valuations, uneven economic growth and corporate earnings growth have kept a lid on stock-market gains this year. The Dow has added just 0.6% and the S&P 500 has gained 2% in 2015.
In the longer run, some investors say stocks will be able to push higher as the Fed begins to raise rates, since it will only move when it feels confident about the outlook for economic growth.
In corporate news, Botox maker Allergan PLC agreed to buy Kythera Biopharmaceuticals Inc. for about $2.1 billion. Kythera is preparing to launch an injection aimed at reducing so-called double chins. Allergan shares added 0.3%, while those of Kythera surged 22%.
The Federal Communications Commission said Wednesday it plans to fine AT&T Inc. $100 million for allegedly deceiving consumers about unlimited wireless data plans. Shares rose 0.4%.
Stocks in Hong Kong rebounded ahead of the conclusion of a U.S. Federal Reserve meeting later in the day, while shares in China gained back some of the ground lost on the first two trading days of the week.
FOREX:
The dollar fell against the yen and the euro after the Federal Reserve indicated the U.S. economy hadn't strengthened enough to warrant raising borrowing costs.
The Federal Open Market Committee offered a darker view of the U.S. economy by lowering growth forecasts over the rest of 2015 at the conclusion of its two-day policy-setting meeting. Fed officials also revised down their interest-rate projections for 2016 and 2017 by a quarter percentage point each and offered no consensus on how many rate increases there would be in 2015.
The FOMC meeting statement and news conference, held by Chairwoman Janet Yellen, muddied the timing of the central bank's first interest-rate increase in nearly a decade.
"People were expecting a stronger commitment by the Fed for a September rate [increase], and two before the end of 2015. The market got a little ahead of itself," said Putri Pascualy, credit strategist and portfolio manager at Pacific Alternative Asset Management Company LLC, which oversees more than $9 billion in investments.
The dollar continued to weaken as Ms. Yellen said after the meeting that the central bank wanted to see "more decisive evidence" of sustained moderate economic growth. She added that the labor market has shown further improvement toward the central bank's objective, but that cyclical weakness in the labor market likely persists.
But the Fed acknowledged that the U.S. economy has expanded moderately after a slow first three months of the year. And 15 of 17 Fed policy makers maintained their interest-rate outlook, saying they expected to start increasing short-term rates before the end of 2015.
BONDS:
U.S. government bonds rallied, boosted by the Federal Reserve's latest signal of a slow approach to raising interest rates.
The bond market had sold off ahead of the Fed's interest-rate statement. A policy shift could shrink the value of outstanding bonds as higher rates make newly issued bonds more attractive for investors.
Buyers stepped in as the Fed cut its economic growth outlook. Fed Chairwoman Janet Yellen said in a news conference that raising rates too soon could threaten the pace of the economic recovery, which is still running at a moderate pace.
"This Fed statement has no teeth and an analysis of the language in the statement suggests this Fed remains as dovish as before," said Jonathan Lewis, chief investment officer at Samson Capital Advisors LLC, which has $7.4 billion in assets under management. "The bond market is deeply oversold and ready for a bounce."
Yields on shorter-dated notes fell the most as they are the most sensitive to changes in the Fed's interest-rate policy outlook.
Fed-funds futures, which are used to place bets on central-bank policy, showed that investors and traders see a 21% likelihood of a rate increase at the September Fed policy meeting, compared with 28% before the statement, according to data from CME Group Inc. The odds were 25% on Tuesday.
Bond investors are grappling with conflicting forces in the Treasury debt market. Improving economic outlooks in the U.S. and eurozone as well as the prospect of tightening policy from the Fed have weighed down bond prices over the past two months. But uncertainty over Greece has provided support.
The 10-year Treasury yield jumped to 2.5% on an intraday basis last week for the first time since September, soaring by more than half of a point from the level in late April.
Investors pulled out $456 million in cash from U.S.-based mutual funds and exchange-traded funds targeting the Treasury bond market for the week that ended June 10, according to fund tracking company Lipper. The net cash withdrawal for the past three weeks totaled $2.732 billion, the biggest three-week outflow since March.
COMMODITIES:
Oil prices swung over a wide range but ended little changed, as a dovish Federal Reserve statement helped the market recover from a selloff after disappointing U.S. stockpile data.
Prices jumped in early trading on expectations that weekly U.S. inventory data would reflect strong commercial and consumer demand for oil and refined fuels such as gasoline. But the report disappointed bullish investors, showing refinery processing rates declining last week and commercial gasoline inventories rising amid lower retail demand.
The market sold off after the news and remained in the red until the release of the Fed statement at 2 p.m. EDT. The statement indicated little change in the Fed outlook but proved bullish for oil prices as a signal that easy-money policies would remain for now.
"The statement is pretty benign," said Jason Schenker, president of Austin, Texas, consultancy Prestige Economics. "That takes away some of the risk of an accelerated removal of accommodative policies, which would otherwise slow demand (for oil) and push prices lower."
The data from the U.S. Energy Information Administration showed crude stockpiles fell by 2.7 million barrels last week and gasoline stocks rose 460,000 barrels. The oil inventory decline was the seventh week in a row, the longest since the last seven-week stretch between late 2013 and early 2014. Still, the EIA noted: "U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years."
(MORE TO FOLLOW) Dow Jones Newswires
June 17, 2015 17:31 ET (21:31 GMT)
0830 HK Apr External Merchandise Trade: Volume & Price StatisticsSome analysts and investors were watching for signs in the data that the long boom in U.S. shale oil production is finally ebbing. The EIA's weekly estimate of domestic oil production did decline, by 21 million barrels to 9.59 million barrels a day, though with an asterisk: all of the production decline could be accounted for in Alaska, while production in the lower 48 states actually increased.
0830 HK May Unemployment
0830 HK May Underemployment
Gold prices rose in electronic trading, after the Federal Reserve gave a less optimistic than expected assessment of the U.S. economy and signaled that it may raise rates less steeply than anticipated in the coming cycle.
TODAY'S HEADLINES:
Fed Signals Rate Hikes at a Gradual Pace
The Federal Reserve kept rates near zero but signaled it was moving toward interest rate increases in the months ahead now that signs of a dip in economic activity early in the year are waning.
Oracle Revenue Falls, Hurt by Stronger Dollar
Oracle revenue fell a disappointing 5% in the May quarter, hurt in part by the stronger dollar and even though the software maker continued to see growth in its cloud-based products.
Famed J.P. Morgan Deal Maker Jimmy Lee Dies
J.P. Morgan said Vice Chairman Jimmy Lee died unexpectedly at age 62. As the former head of the investment bank division, Mr. Lee has long been considered one of the most prominent bankers in the mergers-and-acquisitions world.
Cisco Unveils $10 Billion China Plan
Cisco Systems said it will make investments and partnerships worth more than $10 billion in China as the networking-gear maker looks to strengthen its position in the market.
Japan to Take On Its Deficit-Ridden Finances
Prime Minister Shinzo Abe is expected to unveil a plan to balance Japan's budget in five years, a move that underscores Tokyo's resolve to improve its deficit-ridden finances.
China Buyout Wave Reaches New High
Chinese Internet firm Qihoo 360 Technology received a management-buyout offer valuing it at about $9 billion, marking potentially the largest deal yet in a wave of going-private offers for U.S.-traded Chinese firms.
Former Nokia CEO Elop Leaving Microsoft
Stephen Elop, who had been chief executive at Nokia before it was bought, is leaving Microsoft, where he led the hardware devices business.
Botox Owner Allergan to Buy Maker of Double-Chin Treatment
Allergan agreed to buy Kythera Biopharmaceuticals and its newly approved double-chin treatment in a $2.1 billion deal that aims to plump up the Botox maker's lineup of cosmetic medicines.
FCC Plans to Fine AT&T $100 Million Over Speed Caps
The Federal Communications Commission plans to fine AT&T $100 million for allegedly deceiving consumers about unlimited wireless data plans, the agency said.
FedEx to Inject Funds Into Ground Service
FedEx is boosting its capital spending by 7% to $4.6 billion, with the entire increase going toward its ground segment. The company also posted a loss due to special charges and warned that full-year results would be lower than Wall Street expected.
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TODAY'S CALENDAR:
(All times GMT, followed by country and event)
2245 NZ Q1 GDP
0130 CHN May House Price Index
0130 AUS Jun RBA Bulletin
0130 AUS May International Merchandise Imports
0130 AUS May Foreign Exchange Transactions and Holdings of Official Reserve Assets
0200 CHN May FDI Foreign Direct Investment
0630 INA Jun Bank Indonesia Board of Governors meeting & decision
0800 EU ECB Economic Bulletin
0830 UK May UK monthly retail sales figures
0830 UK May CML mortgage lending figures
0830 UK May Capital issuance
0900 EU Q1 Labor Cost Index
1230 US May CPI
1230 US May Real Earnings
1230 US U.S. Weekly Export Sales
1230 CAN Apr Employment Insurance
1230 US Q1 International Transactions
1230 US 06/13 Unemployment Insurance Weekly Claims Report - Initial Claims
1345 US Bloomberg Consumer Comfort Index
1400 US May Leading Indicators
1400 US Jun Philadelphia Fed Business Outlook Survey
1430 US 06/12 EIA Weekly Natural Gas Storage Report
2030 US Foreign Central Bank Holdings
2030 US Money Stock Measures
2030 US Federal Discount Window Borrowings
(END) Dow Jones Newswires
June 17, 2015 17:31 ET (21:31 GMT)
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