The Day Ahead: Awaiting Clues From the Fed

 | Dec 13, 2011 | 8:30 AM EST  | Comments
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In the Headlines

Despite a revenue warning from Intel (INTC), a slow-growth forecast from 3M MMM and the usual stew of contradictory headlines from Europe, U.S. stock futures pointed higher Tuesday.

One of today's eagerly anticipated events is the Federal Reserve's final interest-rate decision of the year.

After a steep selloff on Wall Street Monday, European stocks showed gains this morning, given a boost by better-than-expected economic sentiment data from Germany. A Spanish Treasury bill auction met with stronger demand than analysts had forecast, also giving equity traders some optimism.

European financials rallied off earlier lows, but some were still suffering on worries about their ability to raise money. Moody's has put eight Spanish banks on review for a possible downgrade. The euro was advancing vs. the greenback early Tuesday.

Elsewhere, Japanese stocks sold off overnight, after Moody's and Fitch said they would review European Union and eurozone plans to address the debt crisis. The Shanghai Composite notched its fourth day in a row of losses.

Economic Docket

At 2:15 p.m. EST, the Federal Open Market Committee is set to release its interest-rate decision. Economists are expecting rates to remain unchanged, but many will be listening for clues about further bond purchases and a specific inflation target.

Before that, however, the Commerce Department is scheduled to step up with data on November retail sales at 8:30 a.m. Economists expect the headline number to show a gain of 0.6%, and the number excluding autos up 0.4%. With the most recent consumer confidence numbers higher, many analysts are hoping that translated to strong retail data.

At 10 a.m., the Commerce Department is back with data on business inventories for October. Economists are eyeing an increase of 0.9% following no change the prior month. These numbers are factored into GDP data, but generally don't move markets.

Commodities Corner

Gold slid early Tuesday after coming under selling pressure yesterday. It fell $0.20 per ounce, to $1,668 in electronic trade.

Crude oil was trading to the upside ahead of Wall Street trade, advancing $0.55 to $98.32 per barrel.

Earnings News

Before the bell, Best Buy (BBY) will report its third quarter. Wall Street expects earnings of $0.51 a share on revenue of $12.14 billion. The stock has rebounded in the past three months after a long downward trend. Sales numbers have been dismal in recent quarters, and the company previously slashed its earnings outlook.

Early Movers

Premarket movers included copper and gold miner Freeport-McMoRan (FCX) , gaining $0.66, 1.71%, to $39.20. The company has reached a deal with its Indonesian miners, ending a strike that has hobbled production for three months.

Netflix (NFLX) , which bolted 6.2% in Monday's session on rumors that it would be acquired by Verizon VZ, continued its upward trajectory this morning. The stock was up $3.25, or 4.32%, to $78.51 in the premarket. Verizon shares gained $0.87, 2.27%, to $39.22 ahead of the open.

DJIA component Merck (MRK) advanced in the premarket, gaining $0.20, or 0.57%, to $35.19. Late Monday, the company said it would acquire worldwide rights to an experimental diabetes drug from Japan's Mochida Pharmaceutical.

Fellow blue chip Intel advanced, despite Monday's reduced fourth-quarter revenue outlook. The chip maker cited disk-drive shortages due to the Thailand floods. That shortage, Intel said, will hurt the global PC supply chain. Intel gained $0.04, or 0.17%, to $24.04 ahead of the bell.

Another semiconductor name, Broadcom (BRCM), jumped $0.72, or 2.46%, to $29.99 after news that it would acquire Israel-based chipmaker BroadLight. According to reports, the deal is valued at around $230 million.

Among analyst moves Tuesday was Nomura's initiation of coverage on MasterCard (MA) and Visa (V) . Both transaction processors were started with ratings of Buy. The two companies have notched strong year-to-date price gains and boast sound fundamental growth. MasterCard advanced $2.72, 0.73%, to $374 in the premarket.

Goldman Sachs resumed coverage on Amazon (AMZN) with a rating of Neutral. Amazon shares were up $0.12, a fractional gain, to $189.64 ahead of the bell.

In IPO news, Jive Software sold 13.4 million shares at $12 apiece, above its planned range of $8 to $10. The maker of social networking software for business users also sold more shares than it had originally proposed. The stock begins trading today on the Nasdaq today under the symbol JIVE.

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