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US markets hold steady ahead of Fed announcement

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US markets hold steady ahead of Fed announcement

US stocks held steady Tuesday, despite a wave of fresh earnings reports making headlines. Eastman Chemical Co. advanced more than 6 percent as earnings topped expectations. Mosaic Co., America’s largest US fertilizer producer, fell 17 percent after Uralkali, the world’s biggest potash producer, ended its relationship with its partner in Belarus. Agrium Inc., a Canadian-based fertilizer producer, slumped more than 5 percent, rounding out a mixed day of earnings.

The benchmark gauges experienced little change following Tuesday’s heavy data flows. The Standard & Poor’s 500 advanced slightly to 1,6585.96 (+0.04 percent). The S&P rose to a session high of 1693.19 in the New York trade, extending its best monthly gain since 2011. The S&P advanced more than 4.4 percent in July, breaking multiple record highs amid better-than-forecasted earnings. The Dow Jones Industrial Average slumped almost 0.2 percent before rebounding in the afternoon session, closing at 15,520.59 (+0.01 percent). Earlier in the week the DJI edged closer to testing a key long-term resistance, which currently resides at 16,040.

With the S&P 500 and DJI each advancing more than 15 percent since January 1, it remains to be seen whether the benchmarks can continue higher amid improving economic conditions in Europe, stability in China and anticipated changes at the Federal Reserve. On the other hand, a booming US housing market, improving employment conditions and stronger-than-expected earnings have spurred optimism US stocks can continue to grow without federal stimulus.

To the last point, the US central bank is expecting two major shakeups over the next few months: the appointment of the next Chairman and a shift in monetary policy. Both changes are likely to illicit a strong response from the market, which is already planning for a post-stimulus US economy.

On Wednesday the Federal Reserve will make its next interest rate decision and monetary policy announcement. While no change to policy is expected, hopes are high Fed policymakers will provide a clearer timetable for stimulus reduction. Analysts expect a very measured response from the Fed, which already announced its plans for tapering in the June FOMC meetings. The overnight rate is likely to remain unchanged at 0.25 percent.

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