Stocks Treat Water Ahead of the Fed Decision
Stocks started the trading in the red and hovered near unchanged as investors consolidated some of Monday solid gains. The S&P 500 climbed nearly 1% on Monday, but investors held steady ahead of Wednesday’s decision on monetary policy by the Federal Reserve. The two day meeting of the FOMC will culminate in a press conference which will be the last for Fed Chairman Ben Bernanke. The S&P 500 index closed down 5.5 points in light volume.
Most analysts believe the Fed will hold steady and begin the process of tapering in January or March. Economic data has been mixed, and continues to reflect an economy that is growing modestly. The Fed needs to begin the process at some point, but this December seems to be early given the recent economic data.
Prior to the opening bell the Labor Department released its Consumer Price Index. The CPI index was unchanged last month, following a 0.1 percent drop in October, according to the Bureau of Labor Statistics. Excluding food and fuel, the core measure rose 0.2 percent. Expectations were for a 0.1% increase on the headline number and 0.2% on core. Homebuilder sales jumped 4 points to 44 compared to expectations of a climb of 1 point.
European stocks got a boost on Tuesday after investor confidence reached its highest level in more than 6-years. The ZEW Center for European Economic Research said that its index of investor and analyst expectations, jumped to 62.0 from 54.6 in November. Economists predicted an increase to 55.0.
Budget deal looks to have the votes in the Senate, which should allow the bi-partisan deal to move forward to the President. The budget agreement that the House has overwhelmingly passed appears to have the necessary support to withstand a filibuster attempt in the Senate, despite a number of Republicans who are interested in further cuts to social programs.
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