The Day Ahead: Futures Higher Ahead of Fed

 | Mar 13, 2012 | 8:30 AM EDT
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In the Headlines

U.S. equity futures headed higher Tuesday, as traders await the Federal Reserve's interest rate announcement later today.

Global stocks were also trading to the plus side. European bourses showed significant gains, given a lift by better-than-expected investor sentiment data from Germany. Gains by NYSE stocks in Monday's session also set the pace for international indices.

In Asia, stocks closed higher, with traders also encouraged by the winning streak on the NYSE. Japan's Nikkei eked out a fractional gain, after a downside reversal as the Bank of Japan kept its key interest rate unchanged, disappointing many who had expected further easing.

Economic Docket

Economic reports today in the U.S. include retail sales data from the Commerce Department. Economists expect an increase of 1% in February. Excluding autos, the increase is expected to be 0.6%. The report is due out at 8:30 a.m. EDT.

The Commerce Department also releases data on January business inventories at 10 a.m. Analysts see a gain of 0.6%. This number is factored into GDP, but typically it has no effect on equities trade.

Of course, the most eagerly anticipated event on the economic calendar is the Fed's rate-setting announcement, which is due out at 2:15 p.m. EDT. Despite last week's better-than-expected employment numbers, economists are not expecting any policy changes. In addition, most analysts don't see any signs of further economic easing on the horizon.

Today's meeting is a one-day event, with no press conference scheduled this time around.

Commodities and M&A Corner

Gold fell by $4.90 per ounce ahead of Fed meeting, to $1694.90.

Crude oil was up $0.41 per barrel, to $106.75 in early Nymex trade.

In a small mergers-and-acquisitions (M&A) deal, muffler shop Midas (MDS) agreed to be acquired by Florida-based TBC Corp. in a cash deal worth $173 million, or $11.50 per share. TBC, which sells replacement tires to retailers, will also assume Midas's liabilities. Midas shares jumped $2.37, or 26.36%, to $11.36 in early trading.

Earnings News

On the earnings front, recent IPO Francesca's Holdings (FRAN) is set to report its fourth-quarter results after the bell. The women's clothing chain is expected to earn $0.16 a share on sales of $57.16 million.

Those would be significant year-over-year gains on the top and bottom lines.

Early Movers

Early movers Tuesday included copper, gold and silver miner Freeport McMoRan (FCX) advancing $0.57, 1.49%, to $38.83. The stock has tumbled more than 10% so far this month, following a decline of 7.9% in February. Worries about a slowing Chinese economy have driven shares lower recently.

CVS Caremark (CVS) edged up $0.02, a fractional gain, to $45.38 in the premarket. The move came despite a downgrade from BMO Capital, which cut the stock to Market Perform from Outperform. The analyst cited valuation. Shares of the pharmacy and retail chain have been rallying to multi-year highs.

Analyst Actions

Enterprise software maker SAP (SAP) was upgraded to Outperform from Market Perform at Bernstein. SAP shares have been rallying out of a consolidation, and are trading at their best levels since 2000. The shares advanced $0.26, 0.37%, to $69.65 ahead of the bell.

Columnist Conversations

volatility is quite low here, and we could see some downsides here in the short term. ...
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this chart is showing great bullish signs here, we like this to take out the old high shortly. ...



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