US stocks advanced a fourth consecutive day ahead of the Federal Reserve’s minutes which are to be released during tomorrow’s trading session. Investors seem to be in good spirits ahead of what could be an extremely important report, suggesting that they feel the economy in the United States can shrug off any tapering in monetary stimulus in the near future.
The indices in New York all enjoyed positive movements throughout Tuesday, with the S&P 500 leading the way. The Standard and Poor’s 500 advanced by 11.86 points, or 0.72%, closing the day at 1652.32. The Dow Jones Industrial Average advanced by 75.65 points, or 0.50%, closing at 15,300.30. Finally, the NASDAQ closed at 3504.26, an advance of 19.43 points, or 0.56%.
With the conclusion of the second quarter now behind us, investors are preparing themselves for earnings reports which are generally expected to be “better than expected”. Brian Jacobsen of Wells Fargo Advantage Funds told Bloomberg, “Everybody’s waiting to see what earnings are going to be like. Until we see more earnings roll in, we’re waiting until tomorrow for what the Fed says. A lots of the other things are prelude’s or noise,”.
The Federal Reserve’s chairman Ben Bernanke is due to make a speech on the current economic situation in the United States tomorrow, which will be followed by the release of the minutes from their meeting which was held on the 17th and 18th of last month.
We are now at the beginning of a period that investors affectionately call “earnings season”, which is started by the release of the first set of results from the Dow Jones Industrial Average constituents. This is routinely Alcoa’s honour and today was no different when they announced that their profits were seven cents per share when excluding “one-off purchases”, such as equipment upgrades or takeover bids. This beat expectations of profits in the region of six cents per share, while their sales also beat expectations by a clear $110 million. These better-than-expected results had a huge knock-on effect for miners across the globe, which saw gains on a day where they would usually have declined due to further economic data coming out of China which suggested that the world’s second-largest economy was entering an economic slowdown.
It was a solid day for FedEx has the career brought an ongoing lawsuit to an amicable close and seemingly became a target for Pershing Square Capital Management LP, who are thought to be looking to invest in the company. This led FedEx to advance by almost 4.5% and breached the $100 share barrier, closing at $103.15 per share.
Cisco Systems Inc advanced by 2.2% on the back of a fresh deal with Microsoft to supply the software giant with hardware to run their servers. IBM were not so lucky and saw their stock decline by almost 2% as Goldman Sachs lowered their rating of the IT specialists from buy to neutral, while also cutting their target price by $20 per share to $200.